The Federal Reserve kept interest rates unchanged as expected but downgraded its economic outlook, citing slower growth and higher inflation due to Trump’s tariffs. Wall Street staged a relief rally after Fed Chair Jerome Powell downplayed inflation concerns.

Jerome Powell, the Fed chair, said that “further progress may be delayed” on inflation because of tariffs. Officials kept interest rates steady but signaled they may cut them twice this year.

Fed Chair Jerome H. Powell said during a news conference that tariffs are already playing a role driving inflation up in goods.