Federal Reserve officials expect inflation to worsen in the coming months but they still foresee two interest rate cuts by the end of this year, the same as they projected in March.

The Fed kept its key rate unchanged for the fourth straight meeting Wednesday, and said the economy is expanding at “a solid pace.” Changes to the Fed’s rate typically — though not always — influence borrowing costs for mortgages, auto loans, credit cards, and business loans.

The central bank also released its latest quarterly projections for the economy and interest rates. It expects noticeably weaker growth, higher inflation, and slightly higher unemployment by the end of this year than it had forecast in March, before President Donald Trump announced sweeping tariffs April 2. Most of those duties were then postponed on April 9.

So far inflation has continued to decline this year while some cracks have appeared in the economy, particularly in housing, where elevated borrowing costs are slowing sales and homebuilding.

“We have to be forward looking,” Fed Chair Jerome Powell said. “We expect a meaningful amount of inflation to arrive in coming months and we have to take that into account. Because the economy is still solid, we can take the time to actually see what’s going to happen.”

Fed officials see inflation, according to their preferred measure, rising to 3% by the end of this year, from 2.1% in April. It also projects the unemployment rate will rise to 4.5%, from 4.2% currently. Growth is expected to slow to just 1.4% this year, down from 2.5% last year.

Some Fed policymakers have expressed particular concern that the duties could boost prices, creating another surge of inflation just a couple of years after the worst inflation spike in four decades. Many economists say that without the higher import taxes, the Fed would likely be cutting its rate further.

Yet so far, inflation has cooled this year, essentially back at the central bank’s target of 2%. Core inflation, which excludes the volatile food and energy categories, remains elevated at 2.5%.

At a press conference after the Fed released its latest policy statement, Powell said, “Increases in tariffs this year are likely to push up prices and weigh on economic activity.” He added, however, that the extent of the impact depends on the size and duration of the tariffs.

“We don’t yet know with any confidence where (the tariffs) will settle out,” he said.

Powell continued to stress that the current strength in the economy allows the Fed to be patient.

“We’ll make smarter and better decisions if we wait just a couple of months or however long it takes to get a sense of what is really going to pass through to inflation.”

On Tuesday, the Bank of Japan kept its key short-term rate unchanged at 0.5%, after actually raising it recently.

But the European Central Bank, Bank of Canada, and Bank of England have reduced their rates this year in part because U.S. tariffs are weakening their economies.

— Associated Press

Amazon gears up Zoox robotaxi line

Amazon is gearing up to make as many as 10,000 robotaxis annually at a sprawling plant near Silicon Valley as it prepares to challenge self-driving cab leader Waymo. Tesla CEO Elon Musk is also vying to join the autonomous race.

The 220,000-square-foot robotaxi factory announced Wednesday heralds a new phase in Amazon’s push into a technological frontier that began taking shape in 2009, when Waymo was launched as a secret project within Google.

Amazon began eyeing the market five years ago when it shelled out $1.2 billion for self-driving startup Zoox, which will be the brand behind a robotaxi service that plans to begin transporting customers in Las Vegas late this year before expanding into San Francisco next year.

Zoox, conceived in 2014, will be trying to catch up to Waymo, which began operating robotaxis in Phoenix nearly five years ago.

Purdue’s Oxy settlement now goes to the states

OxyContin maker Purdue Pharma ’s latest plan to settle thousands of lawsuits over the toll of opioids could soon move forward after every U.S. state involved agreed to it.

A judge on Wednesday said he planned to issue a ruling on Friday on a plan for local governments and individual victims to vote on it.

Government entities, emergency room doctors, insurers, families of children born into withdrawal from the powerful prescription painkiller, individual victims and their families and others would have until Sept. 30 to vote on whether to accept the deal, which calls for members of the Sackler family who own the company to pay up to $7 billion over 15 years.

The settlement is a way to avoid trials with claims from states alone that total more than $2 trillion in damages. Thousands of local governments and other groups have also sued Purdue.

Every state but Oklahoma is involved in the case. Oklahoma reached a separate settlement with Purdue in 2019.

— From news services