Economy Shrinks as Imports Surge, Fed Holds Rates Steady

The US economy contracted in Q1 due to surging imports, but robust consumer spending and business investment offset the decline, while the Fed held interest rates steady amid elevated inflation and tariff uncertainties, signaling a cautious approach as it assesses the trade war's impact.

• The economy shrank in Q1 due to a surge in imports, but consumer spending and business investment remained strong
• Inflation is still above the Fed's 2% target, and tariffs are expected to drive prices higher
• The Fed is likely to hold rates steady, waiting for more clarity on the effects of tariffs on inflation and employment