The Federal Reserve is expected to announce its first interest rate cut this year on Wednesday despite signs of tariffs pushing inflation higher amid rising concerns about the labor market.

Policymakers on the Federal Open Market Committee (FOMC) are expected to cut the benchmark federal funds rate by 25 basis points, the first since December 2024, which would lower the target range to 4% to 4.25%.

Markets have priced in a cut, with the CME FedWatch tool showing a 96% chance of a 25-basis-point cut and a 4% probability of a larger 50-basis-point cut.

Fed policymakers have been monitoring economic data as they consider adjusting monetary policy in support of their dual mandate to promote maximum employment as well as stable prices in line with the Fed's longer-run 2% inflation ta

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