Will the Federal Reserve Hold Its Ground on Rates Despite Pressure from Trump?

As the Federal Reserve prepares to announce its next policy decision on May 7, attention is turning to the mounting pressure from President Donald Trump for immediate interest rate cuts.

Despite his vocal demands, however, economists and market watchers overwhelmingly expect the central bank to hold its benchmark interest rate steady for now.

Last month, Trump criticized the Federal Reserve on social media, accusing it of being “TOO LATE AND WRONG” for not cutting rates sooner. On May 3, he doubled down on this position, stating there is “NO INFLATION” and insisting the Fed should lower rates immediately. But this view diverges sharply from the Fed’s current posture.

According to CME Group’s FedWatch tool, there is a 99% probability that the Federal Open Market Committee (FOMC) will maintain the federal funds rate at its current range of 4.25% to 4.5%—a level unchanged since December. The decision will be announced at 2 p.m. EST on May 7, followed by a press conference with Fed Chair Jerome Powell at 2:30 p.m.

The Fed is navigating a complex and uncertain economic landscape. Recent data presents a mixed picture: the US economy contracted in the first quarter, yet job growth exceeded expectations in April. At the same time, concerns persist over inflationary pressures stemming from Trump’s latest tariffs on Chinese imports, which have added costs for consumers and businesses alike.

Powell and other Fed officials have signaled a cautious, data-driven approach, emphasizing the importance of monitoring how economic conditions evolve—especially in light of the ongoing trade uncertainties.

“The Fed and investors find themselves in a no man’s land waiting to see whether economic policies drive prices higher and growth lower,” said Scott Helfstein of Global X.

Economists note that political pressure is unlikely to influence the Fed’s decisions.

“Criticism from President Trump will not trigger a Fed policy response,” wrote Jan Hatzius, chief economist at Goldman Sachs. “The Fed will act if and when there is compelling evidence to do so.”

Many analysts expect the first rate cut could come as early as July, with market estimates showing an 80% probability of a rate reduction at the FOMC’s July 30 meeting. Others, like Oxford Economics, believe cuts may be postponed until December or later, as the full effects of tariffs and slowing global growth are assessed.

Trump’s assertion that inflation has been vanquished is also being questioned. While gas prices have declined—now averaging $3.18 a gallon, according to AAA—grocery prices have risen 2.4% over the past year, suggesting inflation remains a concern for households.

Consumers, meanwhile, continue to feel the squeeze of high interest rates across various types of credit. Credit card APRs remain above 20%, mortgage rates are still elevated around 6.81%, and auto loan and student loan costs remain high. At the same time, some savers have benefited, with high-yield savings accounts offering interest rates near 4.5%.

Given these crosscurrents, financial experts advise consumers to manage debt proactively and take advantage of balance transfer offers or fixed-rate loans while preparing for further economic shifts.

“There’s just so much uncertainty in the economy now,” said Matt Schulz of LendingTree. “Americans are going to have to wait at least a little longer for the Fed to cut rates.”

With input from CBS News and CNBC.