Federal Reserve Chair Jerome Powell said he’s not in a hurry to adjust interest rates in a world where tariffs could lead to higher inflation and unemployment. Unsurprisingly, the US central bank voted unanimously Wednesday to keep the benchmark federal funds rate in a range of 4.25% to 4.5%, where it’s been since December.  

President Donald Trump‘s trade policy has unleashed a wave of uncertainty across the economy. Economists widely expect the expansive tariffs to boost inflation and weigh on growth. That would pit policymakers’ two goals—price stability and maximum employment—against one another.

With unemployment still low and demand steady, Fed officials have said they are comfortable keeping rates unchanged until they have a better understanding of where the economy is headed. Powell repeated that sentiment Wednesday, adding that the cost of waiting is fairly low.

“We think we’re in the right place to wait and see how things evolve,” Powell said. “We don’t feel like we need to be in a hurry. We feel like it’s appropriate to be patient.” Most US government debt securities rose, as did stocks. Here’s your markets wrap. —David E. Rovella

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After weeks of public requests from the White House to talk, Chinese leader Xi Jinping finally agreed to discuss a potential resolution of the trade war Trump launched. But first, Xi sought to buttress the Chinese economy ahead of planned negotiations in Switzerland, unveiling sweeping measures to stabilize markets, boost tech innovation and protect small businesses. On Wednesday, China’s central bank announced across-the-board rate cuts alongside other steps that could pump 2.1 trillion yuan ($291 billion) into the economy. 

One outcome of the talks could be for Trump to offer Beijing a 90-day pause on all punitive tariffs apart from those related to fentanyl, bringing the US rate back down to 20% from triple digits. That would mirror Trump’s approach to other nations and come close to Beijing’s call for Washington to lift all unilateral levies while negotiations take place.

Not everyone is that optimistic though. Economists at HSBC predicted the US would roll back tariffs to 50%, while Morgan Stanley’s Robin Xing said a “gradual approach” was more likely. Tariffs at those levels would still threaten to wipe out the bulk of US-China trade, requiring Xi’s government to unleash more monetary and fiscal stimulus later this year to hit a growth target of around 5%.

The current situation “is a lose-lose scenario” for all involved, Citigroup economists including Xiangrong Yu wrote in a Wednesday note, while still forecasting prohibitively high tariff levels would remain in place for six to 12 months.

Buying an “American car” doesn’t mean what it used to. Long gone are the days when an imported car necessarily meant it’s a foreign car, and no company proves the point more than General Motors. The Detroit stalwart imported more cars into the US last year than any other automaker, even Japan’s Toyota. Nearly half of the vehicles GM sold in the US last year—1.23 million—were built abroad. That includes many of its most affordable models, like the Korean-made Chevrolet Trax and Buick Envista SUVs, whose low prices depend on cheap production. So it can’t be a surprise then that no American automaker stands to lose more in Trump’s trade war.

Pakistan said it may retaliate after India launched strikes on its territory, signaling a potential further escalation in hostilities between the nuclear-armed rivals following last month’s deadly Kashmir attacks. Just hours after India hit nine targets in Pakistan, Prime Minister Shehbaz Sharif’s office said in a statement that the country “reserves the right to respond, in self-defense.” Islamabad’s response is likely to intensify tensions in a region already unsettled by the April 22 militant attacks in India’s Jammu and Kashmir, which left 26 civilians dead.

The Trump administration plans to rescind Biden-era artificial intelligence chip curbs as part of a broader effort to revise semiconductor trade restrictions that have drawn strong opposition from major tech companies and foreign governments. The repeal, which is not yet final, seeks to refashion a policy launched under President Joe Biden that created three broad tiers of countries for regulating the export of chips from Nvidia and others. The Trump administration will not enforce the so-called AI diffusion rule when it takes effect on May 15.

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