The US Federal Reserve kept its benchmark interest rate unchanged on Wednesday, maintaining the range of 4.25% to 4.5% for the third consecutive meeting.

The central bank’s decision comes in the face of mounting pressure from President Donald Trump, who has repeatedly demanded aggressive rate cuts to counterbalance the effects of his administration’s new wave of import tariffs.

Despite the political heat, the Fed signaled growing concerns over economic uncertainty and inflation risks, opting for monetary stability over a reactionary policy shift.

The unanimous decision by Fed policymakers to hold interest rates steady reflects caution over the evolving US economic outlook.

Officials acknowledged that uncertainty had “increased further,” even as the broader economy continued to expand at a “solid pace.”

Recent data, however, offered mixed signals.

A GDP report showed the US economy contracted in the first quarter of 2025—the first contraction in three years—largely attributed to a rush in imports ahead of Trump’s tariff rollout.

While some sectors remain resilient, the Fed noted that potential risks tied to unemployment and inflation are growing.

The labor market has held firm, with the unemployment rate stabilizing at low levels, according to April’s jobs report.

Still, policymakers are closely watching for signs of strain.

Inflation remains a concern despite signs of cooling

Inflation also remains a central issue in the Fed’s calculus.

Although the central bank’s preferred inflation gauge showed year-over-year price growth slowing to 2.6% in March, the broader measure for the first quarter was a hotter-than-expected 3.5%.

Both figures remain above the Fed’s 2% target, reinforcing its cautious approach.

Fed Chair Jerome Powell and other officials have consistently emphasized the importance of data-driven decisions, particularly amid an uncertain trade environment and geopolitical volatility.

The central bank is aiming to balance inflation control with economic support, especially as Trump’s tariffs begin to take effect.

Trump lashes out at Fed, demands rate cuts

President Trump has made no secret of his frustration with the Fed’s restraint.

In recent weeks, he launched a public campaign calling for immediate interest rate cuts, framing the move as necessary to prevent a potential economic slowdown.

Trump criticized Powell in personal terms, calling him a “total stiff” and “major loser” in a post on Truth Social.

“There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump posted on April 21.

He even hinted at removing Powell, later clarifying that he intends to let the Fed Chair complete his term, which ends in May 2026.

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Gold prices rose on Thursday, reversing a major part of the overnight slide from a two-week high as the US Federal Reserve cautioned against rising inflation and labour market risks. 

Investors also waited for the outcome of the US-China trade negotiations this weekend. 

“The initial market reaction to the Federal Reserve’s (Fed) hawkish pause on Wednesday turns out to be short-lived amid the heightened economic uncertainty led by Trump’s rapidly shifting stance on trade policies,” Haresh Menghani, editor at FXStreet, said in a report. 

At the time of writing, the most-active gold contract on COMEX was at $3,398.60 per ounce, up 0.2% from the previous close.

The contract had risen above $3,400 per ounce, and touched an intra-day high of $3,421.94 an ounce. 

Last week, the gold price had lost 2.4%, which was the sharpest weekly decline since the end of February.

“There was no specific trigger for the current price increase. It is possible that market participants saw the previously slightly lower price level as a buying opportunity,” Carsten Fritsch, commodity analyst at Commerzbank AG, said. 

In addition, uncertainty remains high, which favours demand for gold as a safe haven.

Fed maintains status quo

Citing widespread expectations, the Federal Reserve decided to maintain its benchmark interest rate within the 4.25%-4.5% band.

This decision concluded a two-day monetary policy meeting on Wednesday.

The US central bank’s accompanying statement indicated a further increase in uncertainty regarding the economic outlook.

During the post-meeting press conference, Fed Chair Jerome Powell addressed the significant uncertainty surrounding tariffs.

He stated that the appropriate course of action is to await further clarity on the matter.

“This suggests that the US central bank is not leaning toward cutting rates anytime soon, though it failed to impress the US Dollar bulls,” Menghani said. 

Gold prices derive support from safe-haven inflows

Ongoing geopolitical tensions, specifically in the Middle East and between Russia and Ukraine, are driving safe-haven inflows, which continue to support gold prices.

Early Thursday morning, the Ukrainian air force reported that Russian aircraft launched guided bombs on the Sumy region in northern Ukraine.

Vladimir Putin, the Russian President, declared a three-day ceasefire.

The bombing incident happened mere hours after the ceasefire began.

Meanwhile, Oman announced on Wednesday that it had mediated a truce between Washington and the Houthis, in which both sides agreed to refrain from targeting each other.

Despite calls for de-escalation, Houthi leaders have stated on social media that they do not plan to stop their attacks.

Additionally, Pakistan Prime Minister Shehbaz Sharif promised a response after Indian armed forces reportedly conducted missile strikes on nine terror targets in Pakistan and Pakistan-Occupied Kashmir early Wednesday. 

India’s strike was in retaliation against the tourist killings in Kashmir in April.  

Dhwani Mehta, analyst at FXStreet, said in a report:

Amidst heightened trade uncertainties and geopolitical risks, Gold price is likely to remain the go-to safety net for investors.

Technical outlook

Gold prices have recovered from the slump overnight and are pushing above the psychological barrier of $3,400 an ounce on Thursday. 

Prices on Wednesday fell as the US and China were reportedly preparing for trade talks this weekend.

“These are only talks about talks, setting the agenda for more in-depth discussions to come. But the fact that the two sides are communicating is definitely good news,” David Morrison, senior market analyst at Trade Nation, said. 

It seemed reasonable to expect some kind of pullback, or at least a period of consolidation, given the size of the gains over the first two sessions this week.

Gold prices are likely to continue rising, as daily chart oscillators are strongly positive, indicating upward momentum, according to FXStreet.

Gaining momentum above the $3,434-3,435 area, or the weekly high, would strengthen the positive outlook, enabling the commodity to challenge its record high and aim for the $3,500 level, FXStreet’s Menghani said.

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Climate change protesters disrupted Australian Woodside Energy’s annual general meeting on Thursday with whistles and shouts. 

The demonstration heckled Chief Executive Meg O’Neill and caused multiple suspensions, according to a Reuters report.

Investor dissent continued against Woodside’s gas projects and sustainability efforts, mirroring the previous year’s sentiment. 

Shareholder dissent

Notably, prominent Australian pension funds HESTA and Aware demonstrated their concerns by lodging protest votes specifically targeting the director responsible for overseeing climate risk management within the company. 

This action underscores the increasing scrutiny from institutional investors regarding the adequacy and implementation of climate risk strategies by major energy corporations. 

The protest votes serve as a clear signal of shareholder dissatisfaction and a demand for greater accountability in addressing environmental concerns related to Woodside’s operations and future development plans. 

This continued investor activism highlights a growing trend of utilising shareholder rights to push for stronger corporate action on climate change within the energy sector.

“I’d ask you to please be respectful of the other actual shareholders in the room who have a keen interest in understanding what we’re doing to generate value for them,” O’Neill told protesters who interrupted her opening address, according to the report.

Several individuals shouted, “You should be ashamed!”

Disruption 

Twenty minutes into the annual meeting held in Perth, a city in Western Australia, the proceedings were disrupted by a cacophony of whistling and shouting. 

This outburst occurred while O’Neill was addressing the attendees, focusing on Woodside Energy’s extensive gas portfolio. 

The discussion encompassed the company’s perceived societal contributions and its stated role in addressing critical global issues such as energy security and the urgent need for decarbonisation in the face of climate change. 

Chairman Richard Goyder described the behavior as “unnecessary.”

Event organisers halted the proceedings, attempting to mask the disruption by playing promotional videos highlighting the company’s energy initiatives and their sponsorship of the Fremantle Dockers football club.

O’Neill added:

We have plenty more of these videos we can play.

Last year’s annual meeting of Woodside Energy was met with protests, mirroring the current situation. 

At that meeting, shareholders demonstrated their dissatisfaction by voting down Woodside’s proposed emissions reduction plan. 

The protests and the subsequent vote against the emissions plan underscore the increasing pressure Woodside Energy faces from both environmental activists and its own shareholders to adopt more ambitious and transparent climate strategies. 

LNG expansion

The company recently approved a $17.5 billion liquefied natural gas project in Louisiana, United States. 

This expansion will increase their total LNG production to 24 million tonnes per annum (Mtpa) within the next ten years, representing over 5% of the global LNG supply.

Glass Lewis, a prominent proxy advisory firm, has advised shareholders to vote against the re-election of independent director Ann Pickard. 

Pickard chairs the oversight committee responsible for climate risk, and this recommendation comes before an upcoming meeting.

HESTA, Aware, and Norway’s Storebrand will oppose Pickard’s re-election. US pension funds CalPERS and CALSTRS also plan to vote against director Ben Wyatt.

HESTA said in a statement:

The steps taken by Woodside so far fall short of what is needed to position it for the global transition to a low-carbon future and the company needs to do more.

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The US Federal Reserve opted to maintain its key benchmark interest rate within the existing range of 4.25% to 4.5% following its policy meeting on Wednesday, May 7, 2025.

This decision to hold steady reflects the central bank’s cautious approach amidst a complex economic landscape characterized by significant global uncertainty stemming from trade conflicts, signs of slowing domestic growth, and persistent, albeit moderating, inflation.

Navigating economic crosscurrents: Fed preaches patience

In its official statement, the Federal Open Market Committee (FOMC) clearly signaled its intention to remain data-dependent and patient.

“The Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 per cent,” the release stated.

Crucially, it added: “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”

Fed Chair Jerome Powell reinforced this message, explicitly stating he is in “no hurry” to implement interest rate cuts.

He attributed this stance to the “high level of uncertainty in the US economy,” compounded by the potential inflationary impact of high import tariffs imposed under the Trump administration.

Powell emphasized that the committee needs time to “observe and analyse the economic situation” before considering any policy easing.

This aligns with the Fed’s position in March, where it also held rates steady while projecting potential cuts later in the year, contingent on favourable data.

The dual mandate dilemma: rising risks on both sides

A key factor underpinning the Fed’s caution is the perceived increase in risks to both sides of its congressional mandate: achieving maximum employment and maintaining stable prices.

The FOMC statement explicitly acknowledged this heightened challenge: “Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”

Recent economic indicators illustrate this murky picture.

While the April jobs report showed a respectable gain of 177,000 payrolls, other data points raise concerns.

US GDP contracted at a 0.3% annualized rate in the first quarter of 2025, signaling a potential slowdown amplified by trade war worries.

Furthermore, the manufacturing sector, gauged by the ISM’s PMI index, contracted for a second consecutive month in April, hitting a five-month low.

Sticky inflation remains a barrier to cuts

Despite some moderation from peak levels seen in mid-2022, inflation remains stubbornly above the Fed’s 2% long-term target.

Powell’s comments underscored that the inflation battle is not yet won.

This persistence of underlying price pressures makes immediate rate cuts problematic for the central bank.

The Fed’s explicit warning about rising inflation risks implies that market expectations for rate cuts may need to be pushed further out, potentially impacting consumer spending and corporate profitability if borrowing costs remain elevated.

Tariff impact on sentiment and growth

The Fed is also clearly attuned to the broader economic impact of the administration’s aggressive tariff regime.

Powell flagged the resulting fragility in household and business sentiment as a key concern.

When consumers and businesses feel uncertain about the future due to trade policy shifts, they tend to pull back on spending and delay investment decisions, creating further headwinds for economic growth.

No preemptive easing for tariffs

Crucially, Powell dashed any lingering hopes that the Fed might preemptively cut rates solely to counteract the negative economic effects of the tariffs.

He emphasized the need for concrete data before acting.

“It’s not a situation where we can be preemptive, because we actually don’t know what the right responses to the data will be until we see more data,” Powell stated.

This reinforces the Fed’s commitment to data-dependence rather than attempting to offset anticipated policy impacts.

In essence, the Fed finds itself navigating a complex environment where growth signals are weakening, inflation remains sticky, and the significant wildcard of trade policy casts a long shadow.

Until the data provides a clearer picture of the economy’s trajectory and the true impact of tariffs, the central bank appears poised to maintain its current stance, prioritizing careful observation over immediate action.

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Shares of Tata Motors have been on an upward swing, gaining more than 3.45% on Thursday, marking a surge of about 8.7% in over just two trading days driven by investor optimism surrounding global trade developments.

Analysts and market experts believe Tata Motors is well-positioned to benefit from the recently concluded Free Trade Agreement (FTA) between India and the UK, which includes significant tariff reductions for high-end vehicles imported under quota.

The announcement of the agreement by Prime Minister Narendra Modi has sparked interest in related stocks, especially companies with a large UK footprint like Tata Motors.

At the same time, a report by The New York Times that the US is expected to announce a trade pact with the UK later in the day, has also added to investor cheer due to positive implications on Jaguar Land Rover which gets 25% of its total sales from the US market.

Ind-UK FTA to see JLR’s price in India fall

The FTA between India and UK reduces tariffs on imported automobiles from 100% to 10%, under specific quotas.

This change is seen as a direct positive for Tata Motors’ UK-based subsidiary, Jaguar Land Rover (JLR), whose premium car lineup includes the widely known Range Rover series.

The lower tariffs could help boost JLR’s India-bound shipments, including electric vehicle models planned for export from the UK.

Jefferies, in a recent note, projected that JLR prices could fall by 6% to 20% in India as a result of the agreement.

The firm also identified Indian textiles, luxury carmakers, and premium liquor brands as key beneficiaries of the pact.

Analyst Mitesh Panchal, a Sebi-registered investment advisor, told Business Today “Tata Motors will be a clear beneficiary of the FTA agreement. Investors should accumulate in the Rs 680-700 range, with short-term targets of Rs 780-820.”

Rajesh Sinha of Bonanza added that the agreement could bolster both strategic and economic ties between India and the UK and pointed to JLR’s plans to establish a new manufacturing facility in Tamil Nadu as part of its long-term strategy.

US-UK trade deal speculation adds to investor cheer

Separately, a report by The New York Times suggested that a US-UK trade deal may also be in the works.

Former US President Donald Trump hinted on Truth Social that a major trade pact involving a “highly respected country” would be announced shortly.

Although unnamed, market participants speculated that the country was the UK.

The potential implications for JLR are significant.

The automaker derives about 25% of its total sales from the US market.

In April, JLR briefly paused vehicle shipments to the United States following a 25% tariff on all auto imports.

Reports now indicate that shipments have resumed, though no official confirmation has been made.

Demerger plan adds further momentum to stock

Adding to the positive sentiment, Tata Motors recently secured shareholder approval for a major internal restructuring on Wednesday.

The company plans to split its commercial and passenger vehicle businesses into two separate publicly listed entities.

The decision, which received near-unanimous support, is expected to improve operational focus and unlock shareholder value.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said the stock remains attractive from a medium- to long-term perspective.

“Those holding should continue with their positions and accumulate on dips,” he advised.

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