May 2025 FOMC Reaction: The Risks Have Risen

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Despite acknowledging that “uncertainty about the economic outlook has increased further,” the steady stream of generally solid economic data from the past few months prompted the Fed to hold key interest rates steady today. The decision is a vote of confidence in the enduring strength of the US labor market, which has thus far weathered several potentially disruptive policy shifts in trade, immigration, and government spending. Many broad economic indicators — including job growth, unemployment, and layoffs — have held steady in recent months. However, the hard economic data isn’t matching the vibes, as soft data coming from consumer and

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