WASHINGTON — Federal Reserve officials left interest rates unchanged at their June meeting but opened the door to a future cut if President Donald Trump’s trade fight intensifies and risks to the U.S. economy increase.

While the Fed still expects a strong labor market and inflation near its goal, “uncertainties about this outlook have increased,” according to the central bank’s post-meeting statement, released Wednesday.

The Fed is worried about weak inflation, slowing global growth, and Trump’s trade war, and that’s pushing them closer to a rate cut. But officials suggested on Wednesday they are not yet ready to pull the trigger and want to keep an eye on how things shake out before making a move.

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Fed Chairman Jerome Powell, in a news conference after the meeting, referenced Trump’s trade disputes and softening global growth as factors that could influence the Fed’s decision to shift away from the “patient” stance it adopted earlier this year.

“In the weeks since our last meeting the crosscurrents have reemerged,” he said, “raising concerns about the strength of the global economy.”

Powell said the Fed made “significant changes” to its policy statement, which marked down its assessment of overall economic activity to “moderate” instead of “solid” as it did in May.


Since the Fed’s last meeting in May, Trump has renewed his trade fight with China, threatened tariffs on Mexico and given Japan and Europe six months to reach a trade agreement with the United States or face auto tariffs. Trade tensions have heightened uncertainty among companies, investors and foreign leaders and may be weighing on business investment.

“News about trade has been an important driver of sentiment,” Powell said. “We’re also looking at global growth. It’s really trade developments and concerns about global growth that are on our mind.”

The Fed noted in its statement Wednesday that “indicators of business fixed investment have been soft,” and said that “inflation for items other than food and energy are running below 2 percent,” reflecting downgrades to the language it used to describe investment and inflation following the early May meeting.

Still, Powell said most officials thought it was too soon to act, given recent economic developments are fluid and could resolve in the coming months.

“Some of these developments are so recent that we want to see whether they’re sustained,” he said.

For the first time during his tenure, Powell did not have a unanimous vote on a decision to hold rates steady. James Bullard, president of the Federal Reserve Bank of St. Louis, dissented, indicating he wanted to lower rates at this meeting.


And most Fed officials are predicting rate cuts in the future. Officials indicated that they expected to cut rates next year, reducing the median Fed funds rate forecast to 2.1% for 2020. It currently stands at 2.25% to 2.5%.

“A number of those who wrote down a flat rate path agree that the” case for additional accommodation has “strengthened” since May, Powell said. “We will use our tools as appropriate to sustain the expansion.”

One of the biggest risks to the expansion has been trade uncertainty, particularly related to China. Talks between China and the United States collapsed last month, prompting Trump to raise tariffs on $200 billion worth of Chinese goods and threaten to tax nearly all of its imports. China has retaliated on U.S. products.

The two sides had appeared to be at an impasse but on Tuesday, Trump said he would have an “extended meeting” with Chinese President Xi Jinping at the Group of 20 summit in Japan later this month. That meeting, which could either defuse or escalate the trade fight, will be critical to the Fed’s decision-making.

The decision to hold rates steady came despite ongoing pressure from Trump, who on Monday suggested he might demote Powell if the central bank did not move toward easing rates.

When asked about the president’s comments, Powell said “I think the law is clear that I have a four-year term and I fully intend to serve it.”