By CHRISTOPHER RUGABER, Associated Press Economics Writer

WASHINGTON (AP) — The U.S. economy is mostly in good shape but that isn’t saving Federal Reserve chair Jerome Powell from a spell of angst.

As the Fed considers its next moves during a two-day meeting this week, most economic data looks solid: Inflation has been steadily fading, while the unemployment rate is still a historically low 4.2%. Yet President Donald Trump’s widespread tariffs may push inflation higher in the coming months, while also possibly slowing growth.

With the outlook uncertain, Fed policymakers are expected to keep their key interest rate unchanged on Wednesday at about 4.4%. Officials will also release a set of quarterly economic projections that are expected to show inflation will accelerate later this year, while unemployment my also tick up a bit.

The projections may also signal that the Fed will cut its key rate twice later this year, economists say.

The prospect of higher inflation would typically lead the Fed to keep rates unchanged or even raise them, while rising unemployment would usually lead the Fed to cut its key rate. With the economy potentially pulling in both directions, Powell and other Fed officials have underscored in recent remarks that they are prepared to wait for clearer signals on which way to move.

The Fed is in “an uncomfortable purgatory,” said Diane Swonk, chief economist at accounting giant KPMG. “Without the threat of tariffs, we would be seeing the Fed cut. That’s not where we’re at because of the uncertainty and the threat and the effects (of tariffs) that we don’t know yet.”

The Trump White House has sharply ramped up the pressure on Powell to reduce borrowing costs, with Trump himself calling the Fed chair a “numbskull” for not cutting and other officials, including Vice President JD Vance and Commerce Secretary Howard Lutnick, also calling for a rate reduction.

U.S. President Donald Trump gestures as he attends a family photo session during the G7 Summit, in Kananaskis, Alberta, Monday, June 16, 2025. (Suzanne Plunkett/Pool Photo via AP)

When the Fed reduces its key short-term rate, it often — though not always — leads to lower costs for consumer and business borrowing, including for mortgages, auto loans, and credit cards. Yet financial markets also influence the level of longer-term rates and can keep them elevated even if the Fed reduces the shorter-term rate it controls.

For example, if investors worry that inflation will remain elevated, they can demand higher interest rates on longer-term Treasury securities, which influence other borrowing costs.

Even though Trump has said the economy is doing well, he has also argued that a rate cut would cause the economy to take off “like a rocket.”

But Trump has also highlighted another concern: If the Fed doesn’t cut rates, the federal government will have to pay more interest on its huge budget deficits, which are projected to grow even larger under the White House’s proposed tax and budget legislation currently being considered by the Senate.

“We’re going to spend $600 billion a year, $600 billion because of one numbskull that sits here (and says), ‘I don’t see enough reason to cut the rates now,’” Trump said last week.

Pushing the Fed to cut rates simply to save the government on its interest payments typically raises alarms among economists, because it would threaten the Fed’s congressional mandate to focus on stable prices and maximum employment.

Yet the markets haven’t reacted much to Trump’s recent attacks on the Fed, now that the Supreme Court, in a ruling last month, suggested that a president doesn’t have the legal power to fire the Fed chair.

Still, with inflation remaining low, so far, despite the imposition of tariffs, the Fed may come under greater pressure in the coming months from economists and investors to cut rates. Policymakers estimate that the interest rate that would neither stimulate the economy nor slow it down — known as the “neutral rate” — is about 3%.

Meanwhile, inflation — according to the Fed’s preferred measure — is just 2.1%, almost back to the central bank’s 2% target. Such a low reading suggests the Fed’s rate should be closer to neutral, below its current level of 4.4%, because it doesn’t need a high rate to slow inflation.

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“It’s a reasonable case for the Fed to grapple with,” said Jon Hilsenrath, a visiting scholar at Duke University.

Yet according to a survey Hilsenrath conducted for Duke of former Fed officials and staff, they expect the Fed to cut interest rates just once this year. “There’s a risk that inflation moves up and they don’t want to get ahead of themselves,” he said.

It’s possible that tariffs may not push up inflation as much as economists have feared. But one reason for that could be that the economy may slow, lifting unemployment and making consumers unwilling to pay higher prices, which would reduce inflation.

Economists at Goldman Sachs said in a recent research note that they expect inflation will rise to 3.6% by December, but that the increase will only be temporary.

“The main reason we are less worried is that we expect the economy to be weak this year, with … a modest rise in the unemployment rate,” Jan Hatzius, chief economist at Goldman, and his colleagues wrote.

A noticeable weakening of the economy that slows consumer spending and holds down inflation would likely lead the Fed to quickly cut rates. But they will be more comfortable doing so once they have a better sense of the full impact of tariffs.

Michael Gapen, chief U.S. economist at Morgan Stanley, said in a note Monday that the Fed “will need several months to assess the effects of policy changes, believing that ‘later and correct is better than sooner and wrong.’”

WASHINGTON — Members of Congress will attend emergency briefings this week after the killing of a Minnesota state lawmaker brought renewed fears — and stoked existing partisan tensions — over the security of federal lawmakers when in Washington and at home.

The suspect in the attack had dozens of federal lawmakers listed in his writings, besides the state lawmakers and others he’s accused of targeting. The man is accused of shooting and killing former Democratic House Speaker Melissa Hortman and her husband, Mark, in their home early Saturday in the northern Minneapolis suburbs and wounding another lawmaker and his wife at their home.

The shootings come after credible threats to members of Congress have more than doubled in the last decade, the troubling tally of an era that has been marked by a string of violent attacks against lawmakers and their families.

In 2011, Democratic Rep. Gabby Giffords was shot and wounded at an event in her Arizona district. In 2017, Republican Rep. Steve Scalise was shot and wounded as he practiced for a congressional baseball game with other GOP lawmakers near Washington. In 2022, Democratic House Speaker Nancy Pelosi’s husband, Paul, was attacked by a man who broke into their San Francisco home. And in 2024, two men separately tried to assassinate Donald Trump during his Republican presidential campaign.

All four survived, some with serious injuries. But those attacks, among others and many close calls for members of both major political parties, have rattled lawmakers and raised recurring questions about whether they have enough security — and whether they can ever be truly safe in their jobs.

“I don’t have a solution to this problem right now,” said Minnesota Democratic Sen. Tina Smith, a friend of Hortman’s who received increased security after the attack. “I just see so clearly that this current state of play is not sustainable.”

Connecticut Democratic Sen. Chris Murphy said lawmakers are “clearly at the point where we have to adjust the options available to us.”

The U.S. Capitol Police’s threat assessment section investigated 9,474 “concerning statements and direct threats” against members of Congress last year, the highest number since 2021, the year that the Capitol was attacked by Trump’s supporters after he tried to overturn his 2020 presidential election defeat to Democrat Joe Biden. In 2017, there were 3,939 investigated threats, the Capitol Police said.

While members of Congress may be high profile, they do have some resources available that might not be available to state and local lawmakers, said Sen. Mike Rounds of South Dakota, who was a member of the South Dakota state Senate for 10 years before he was the state’s governor. In the state legislature, “it just wasn’t feasible all the time” to have increased security, said Rounds, a Republican.

As threats have increased, members of Congress have had access to new funding to add security at their personal homes. But it is unclear how many have used it and whether there is enough money to keep lawmakers truly safe.

“Resources should not be the reason that a U.S. senator or congressman gets killed,” Murphy said.

Instead of bringing lawmakers together, the Minnesota shootings have created new internal tensions. Smith on Monday confronted one of her fellow senators, Utah Republican Mike Lee, for a series of posts on X over the weekend. One mocked Minnesota Gov. Tim Walz, a Democrat who ran for vice president last year.

Another post said of the killings, “This is what happens when Marxists don’t get their way.”

Trump said he had no plans to call Walz, describing the Democratic leader as “so whacked out.”

“Why would I call him? I could call him and say, ‘Hi, how are you doing?’” the Republican president told reporters aboard Air Force One during an overnight flight back to Washington. “The guy doesn’t have a clue. He’s a mess. So, you know, I could be nice and call him, but why waste time?”

Friends and former colleagues interviewed by The Associated Press described Vance Luther Boelter, the man accused of killing Hortman and her husband, as a devout Christian who attended an evangelical church and went to campaign rallies for Trump. Records show Boelter registered to vote as a Republican while living in Oklahoma in 2004 before moving to Minnesota, where voters don’t list party affiliation. His attorney has declined to comment.

Smith talked to Lee outside a GOP conference meeting as soon as she arrived in Washington on Monday. “I would say he seemed surprised to be confronted,” she told reporters afterward.

Senate Democratic Leader Chuck Schumer of New York also called out Lee’s posts on the Senate floor, saying that for him to “fan the flames of division with falsities, while the killer was still on the loose, is deeply irresponsible. He should take his posts down and immediately apologize to the families of the victims.”

Lee’s office did not respond to a request for comment.

Lawmakers were already on edge before the shootings, which came less than two days after Democratic Sen. Alex Padilla was forcibly removed from a press conference with Homeland Security Secretary Kristi Noem in California. Officers restrained Padilla and put him on the ground.

Angry Democratic senators immediately took to the Senate floor Thursday afternoon to denounce Padilla’s treatment. “What was really hard for me to see was that a member of this body was driven to his knees and made to kneel before authorities,” said New Jersey Sen. Cory Booker. “This is a test. This is a crossroads.”

Senate Democrats say at a briefing Tuesday they plan to ask security officials, as well as Republican leadership, about Padilla’s removal from the press conference and their protection against outside threats.

“I certainly hope to hear leadership responding in a profound way,” said New Mexico Sen. Ben Ray Lujan, a Democrat.

Sen. Tammy Baldwin, D-Wis., who said she had been informed that her name was also on the suspect’s list, said she wanted to hear recommendations at the briefing on how to improve security.

“And we can take those recommendations,” Baldwin said. “But I think, both with the president and his administration and with members of Congress, that we need to bring the temperature down. There’s no place for political violence ever. And the rhetoric — words matter.”

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By ROB GILLIES and JILL LAWLESS, Associated Press

KANANASKIS, Alberta (AP) — Six of the Group of Seven leaders are trying on the final day of their summit Tuesday to show the wealthy nations’ club still has the clout to shape world events despite the early departure of U.S. President Donald Trump.

Canadian Prime Minister Mark Carney and his counterparts from the U.K., France, Germany, Italy and Japan will be joined by Ukrainian President Volodymyr Zelenskyy and NATO chief Mark Rutte to discuss Russia’s relentless war on its neighbor.

European Council President Antonio Costa, from left, Japan’s Prime Minister Shigeru Ishiba, Italian Prime Minister Giorgia Meloni, French President Emmanuel Macron, Canada’s Prime Minister Mark Carney, U.S. President Donald Trump, Britain’s Prime Minister Keir Starmer, German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen pose for a family photo during the G7 Summit, in Kananaskis, Alberta, Monday, June 16, 2025. (Suzanne Plunkett/Pool Photo via AP)

World leaders had gathered in Canada with the specific goal of helping to defuse a series of pressure points, only to be disrupted by a showdown over Iran’s nuclear program that could escalate in dangerous and uncontrollable ways. Israel launched an aerial bombardment campaign against Iran on Friday, and Iran has hit back with missiles and drones.

Trump left the summit in the Canadian Rocky Mountain resort of Kananaskis a day early late Monday, saying: “I have to be back, very important.” As conflict between Israel and Iran intensified, he declared that Tehran should be evacuated “immediately” — while also expressing optimism about a deal to stop the violence.

Before leaving, Trump joined the other leaders in issuing a statement saying Iran “can never have a nuclear weapon” and calling for a “de-escalation of hostilities in the Middle East, including a ceasefire in Gaza.” Getting unanimity — even on a short and broadly worded statement — was a modest measure of success for the group.

At the summit, Trump warned that Tehran must curb its nuclear program before it’s “too late.” He said Iranian leaders would “like to talk” but they had already had 60 days to reach an agreement on their nuclear ambitions and failed to do so before the Israeli aerial assault began. “They have to make a deal,” he said.

Asked what it would take for the U.S. to get involved in the conflict militarily, Trump said Monday morning, “I don’t want to talk about that.“

But by Monday afternoon, Trump warned ominously on social media, “Everyone should immediately evacuate Tehran!” Shortly after that, Trump decided to leave the summit and skip a series of Tuesday meetings that would address the war in Ukraine and trade issues.

The sudden departure only heightened the drama of a world that seems on verge of several firestorms. Trump already has imposed severe tariffs on multiple nations that risk a global economic slowdown. There has been little progress on settling the wars in Ukraine and Gaza.

Trump’s stance on Ukraine puts him fundamentally at odds with the other G7 leaders, who back Ukraine and are clear that Russia is the aggressor in the war.

The U.S. president on Monday suggested there would have been no war if G7 members hadn’t expelled Putin from the organization in 2014 for annexing Crimea.

Trump on Monday demurred when asked if he supported Russia, saying “I only care about saving lives.”

With talks on ending the war at an impasse, Starmer said Britain and other G7 members were slapping new tariffs on Russia in a bid to get it to the ceasefire negotiating table. Zelenskyy is due to attend the summit Tuesday at Carney’s invitation, along with other leaders including Rutte and Indian Prime Minister Narendra Modi.

Trump declined to join in the sanctions on Russia, saying he would wait until Europe did so first.

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“When I sanction a country, that costs the U.S. a lot of money, a tremendous amount of money,” he said.

Trump had been scheduled before his departure to meet with Zelenskyy and with Mexican President Claudia Sheinbaum.

On the Middle East, Merz told reporters that Germany was planning to draw up a final communique proposal on the Israel-Iran conflict that will stress that “Iran must under no circumstances be allowed to acquire nuclear weapons-capable material.”

Trump also seemed to put a greater priority on addressing his grievances with other nations’ trade policies than on collaboration with G7 allies. The U.S. president has imposed 50% tariffs on steel and aluminum as well as 25% tariffs on autos. Trump is also charging a 10% tax on imports from most countries, though he could raise rates on July 9, after the 90-day negotiating period set by him would expire.

He announced with Starmer that they had signed a trade framework Monday that was previously announced in May, with Trump saying that British trade was “very well protected’ because ”I like them, that’s why. That’s their ultimate protection.”

Associated Press writers Will Weissert in Banff, Alberta, and Josh Boak in Calgary, Alberta, contributed to this story.

By JOSEPH KRAUSS, JON GAMBRELL and NATALIE MELZER, Associated Press

DUBAI, United Arab Emirates (AP) — Israel appeared to be expanding its air campaign against Tehran five days after its surprise attack on Iran’s military and nuclear program, as U.S. President Donald Trump posted an ominous message warning residents of the capital to evacuate.

“IRAN CAN NOT HAVE A NUCLEAR WEAPON,” Trump wrote Monday night before returning to Washington early from a Group of Seven summit in Canada. “Everyone should immediately evacuate Tehran!” he added.

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Trump later denied he had rushed back to work on a ceasefire, telling reporters on Air Force One during the flight back to Washington: “I’m not looking at a ceasefire. We’re looking at better than a ceasefire.”

Asked why he had urged for the evacuation of Tehran, he said: “I just want people to be safe.”

Earlier, the Israeli military had called for some 330,000 residents of a neighborhood in downtown Tehran to evacuate. Tehran is one of the largest cities in the Middle East, with around 10 million people, roughly equivalent to the entire population of Israel. People have been fleeing since the hostilities began.

Israel says its sweeping assault on Iran’s top military leaders, nuclear scientists, uranium enrichment sites and ballistic missile program is necessary to prevent its longtime adversary from getting any closer to building an atomic weapon. The strikes have killed at least 224 people in Iran and wounded 1,277 since Friday.

Iran has retaliated by launching more than 370 missiles and hundreds of drones at Israel. So far, 24 people have been killed in Israel and more than 500 wounded. The Israeli military said a new barrage of missiles was launched on Tuesday, and explosions could be heard in northern Israel.

Shops closed, lines for gas in Iran’s capital

Downtown Tehran appeared to be emptying out early Tuesday, with many shops closed. The ancient Grand Bazaar was also closed, something that only happened in the past during anti-government demonstrations or at the height of the coronavirus pandemic.

On the roads out of Tehran to the west, traffic stood bumper to bumper. Many appeared to be heading to the Caspian Sea area. Long lines also could be seen at gas stations in Tehran, with printed placards and boards calling for a “severe” response to Israel visible across the city.

Authorities cancelled leave for doctors and nurses as the attacks continue, but insisted everything was under control and did not offer any guidance for the public on what to do.

The Israeli military meanwhile claimed to have killed someone it described as Iran’s top general in a strike on Tehran. Iran did not immediately comment on the reported killing of Gen. Ali Shadmani, who had just been named as the head of the Khatam al-Anbiya Central Headquarters, part of the paramilitary Revolutionary Guard.

Iran has named other generals to replace the top leaders of the Guard and the regular armed forces after they were killed in earlier strikes.

Trump leaves G7 early to focus on conflict

Before leaving the summit in Canada, Trump joined the other leaders in a joint statement saying Iran “can never have a nuclear weapon” and calling for a “de-escalation of hostilities in the Middle East, including a ceasefire in Gaza.”

French President Emmanuel Macron told reporters that discussions were underway on a ceasefire between Israel and Iran, but Trump appeared to shoot that down in his comments on social media.

Macron “mistakenly said that I left the G7 Summit, in Canada, to go back to D.C. to work on a ‘cease fire’ between Israel and Iran,” Trump wrote. “Wrong! He has no idea why I am now on my way to Washington, but it certainly has nothing to do with a Cease Fire. Much bigger than that.”

Meanwhile, U.S. Defense Secretary Pete Hegseth headed to the White House Situation Room to meet with the president and his national security team.

Hegseth didn’t provide details on what prompted the meeting but said on Fox News late Monday that the movements were to “ensure that our people are safe.”

Trump said he wasn’t ready to give up on diplomatic talks, and could send Vice President JD Vance and special envoy Steve Witkoff to meet with the Iranians.

“I may,” he said. “It depends on what happens when I get back.”

Israel says it has ‘aerial superiority’ over Tehran

Israeli military spokesperson Brig. Gen. Effie Defrin said Monday his country’s forces had “achieved full aerial superiority over Tehran’s skies.”

The military said it destroyed more than 120 surface-to-surface missile launchers in central Iran, a third of Iran’s total, including multiple launchers just before they launched ballistic missiles towards Israel. It also destroyed two F-14 fighter planes that Iran used to target Israeli aircraft, the military said.

Israeli military officials also said fighter jets had struck 10 command centers in Tehran belonging to Iran’s Quds Force, an elite arm of its paramilitary Revolutionary Guard that conducts military and intelligence operations outside Iran.

Israel’s military issued an evacuation warning for a part of central Tehran that houses state TV and police headquarters, as well as three large hospitals, including one owned by the Guard. It has issued similar evacuation warnings for parts of the Gaza Strip and Lebanon ahead of strikes.

On Monday, an Israeli strike hit the headquarters of Iran’s state-run TV station, sending a television anchor fleeing her studio during a live broadcast. The Israeli military said Tuesday it had hit the station because “the broadcast channel was used to spread anti-Israel propaganda.”

Israel says strikes have set back nuclear program

Prime Minister Benjamin Netanyahu said the Israeli strikes have set Iran’s nuclear program back a “very, very long time,” and told reporters he is in daily touch with Trump.

Iran maintains its nuclear program is peaceful, and the U.S. and others have assessed Tehran has not had an organized effort to pursue a nuclear weapon since 2003. The head of the International Atomic Energy Agency has repeatedly warned that the country has enough enriched uranium to make several nuclear bombs should it choose to do so.

So far, Israel has targeted multiple Iranian nuclear program sites but has not been able to destroy Iran’s Fordo uranium enrichment facility.

The site is buried deep underground — and to eliminate it, Israel may need the 30,000-pound (14,000-kilogram) GBU-57 Massive Ordnance Penetrator, a U.S. bunker-busting bomb that uses its weight and sheer kinetic force to reach deeply buried targets. Israel does not have the munition or the bomber needed to deliver it. The penetrator is currently delivered by the B-2 stealth bomber.

No sign of conflict letting up

Iran’s foreign minister, Abbas Araghchi, appeared to make a veiled plea Monday for the U.S. to step in and negotiate an end to hostilities.

In a post on X, Araghchi wrote that if Trump is “genuine about diplomacy and interested in stopping this war, next steps are consequential.”

Firefighters work at site hit by a missile launched from Iran in central Israel on Tuesday, June 17, 2025. (AP Photo/Baz Ratner)

“It takes one phone call from Washington to muzzle someone like Netanyahu,” Iran’s top diplomat wrote. “That may pave the way for a return to diplomacy.”

The message to Washington was sent as the latest talks between the U.S. and Iran were canceled over the weekend after Israel’s surprise bombardment.

On Sunday, Araghchi said Iran will stop its strikes if Israel does the same.

Melzer reported from Nahariya, Israel. Associated Press writers Nasser Karimi and Amir Vahdat in Tehran, Iran, Melanie Lidman in Tel Aviv, Israel, and Tara Copp in Washington contributed to this report.