Jeff Carey is a veteran reporter covering sports and architecture. He was the founding editor of the Minneapolis Mini Times, a local paper with a circulation of more than 500,000. He divides his time between the east and west coast.
Washington, D.C. — In a widely anticipated move, Federal Reserve Chair Jerome Powell announced Wednesday that the central bank will keep interest rates unchanged, citing a “complex and evolving set of uncertainties,” including ongoing trade tensions, stubborn inflation patterns, and, unexpectedly, the election of a new pope.
The decision came at the conclusion of the Federal Open Market Committee’s two-day policy meeting. Interest rates will remain in the range of 5.25% to 5.5%, where they’ve stood since mid-2023. While the Fed has signaled in recent months that rate cuts could be on the horizon, Powell struck a more cautious tone this time.
“We are committed to returning inflation to our 2% target, but we must also recognize the unpredictable landscape we are navigating,” Powell said at a press conference. “Trade policy remains a significant source of uncertainty, inflation is proving stickier than we’d like, and even global events—such as the unexpected selection of Pope Clement XV—can shift the economic mood and behavior.”
While the Fed typically confines its commentary to economic indicators, the mention of the Vatican surprised some analysts. The election of a new pope, following the sudden resignation of Pope Francis last month, has stirred social and geopolitical speculation. Pope Clement XV, known for his progressive stances and vocal critiques of Western economic models during his tenure as Archbishop of Manila, has already called for a global “rethink” of debt and trade justice.
“Markets are digesting not only his moral voice but the possibility of greater momentum behind global debt forgiveness and reform efforts,” said Maria Gonzalez, chief economist at Keystone Macro. “That may sound distant from Fed policy, but it impacts emerging market risk, investor sentiment, and even currency movements.”
Back on more familiar ground, Powell emphasized the Fed’s primary concerns: domestic inflation and trade disruptions. Consumer prices rose at an annual rate of 3.4% in April, slightly above expectations, largely driven by higher food and energy costs. Meanwhile, U.S. trade relations with both China and the European Union remain strained, with new tariff measures proposed on both sides.
“We are monitoring how tariffs feed into prices and consumer demand,” Powell said. “Policy shifts in that domain are outside our control but materially affect our mandate.”
U.S. stock markets closed slightly higher on the day, with the S&P 500 up 0.4% and the Dow Jones Industrial Average gaining 0.3%, as investors welcomed the Fed’s steady hand but remained wary of what lies ahead.
“The Fed is threading a needle,” said Kara Monroe, chief investment strategist at Ashbridge Capital. “They can’t ease prematurely, but they also know that holding rates too long could stall growth. The added unpredictability—from geopolitics to the Vatican—just makes that calculus harder.”
For now, the Fed appears poised to hold its ground while watching the global chessboard shift—whether in Washington, Beijing, or Rome.
Jeff Carey is a veteran reporter covering sports and architecture. He was the founding editor of the Minneapolis Mini Times, a local paper with a circulation of more than 500,000. He divides his time between the east and west coast.
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