US Federal Reserve Holds Rates Steady Despite Trump Pressure

The United States Federal Reserve has decided to keep interest rates unchanged at 4.25-4.50 percent, holding its line on monetary policy despite mounting public and political pressure from President Donald Trump to cut borrowing costs.

The decision, announced on Wednesday at the end of the central bank’s two-day policy meeting, was widely anticipated by economists, as uncertainty surrounding Trump’s tariff policies continues to weigh on the US economy.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated,” the Fed said in a statement following the meeting.

Rates have now been steady since December, as Fed Chair Jerome Powell has consistently argued that maintaining current levels provides flexibility to address inflationary pressures tied to tariff disruptions. Inflation edged up to 2.7 percent earlier this month, according to the consumer price index.

This week’s decision was notable for dissent among the Fed’s seven-member Board of Governors. Two Trump-appointed officials — Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller — voted for a quarter-point rate cut, marking the first such split in over three decades.

The dissent is likely to fuel speculation over how Trump’s very public pressure campaign is influencing the traditionally independent central bank. Both Bowman and Waller have echoed Trump’s argument that monetary policy is “too tight” given sluggish growth and the president’s sweeping tariffs.

Trump has repeatedly blasted Powell over his cautious stance on rate cuts, even threatening to replace him when his term expires in May 2026. On Wednesday, before the Fed’s announcement, the White House issued a sharp statement urging action:

“There are no more excuses — now is the time for ‘too late’ Powell to cut the rates!”

Last week, Trump also claimed — after a private visit to Fed headquarters — that he believed a rate cut was imminent, calling Powell a “numbskull” in later comments.

Powell reiterated on Wednesday that the Fed does not and should not base monetary policy on political demands.

“We don’t consider the fiscal needs of the federal government. No advanced economy’s central bank does that,” Powell said, warning that politicizing rate decisions would undermine both the Fed’s credibility and US fiscal policy

The Fed’s statement noted that while unemployment remains low and labor market conditions are solid, “growth of economic activity moderated in the first half of the year.”

Tariffs imposed by Trump on dozens of countries have fueled price increases and complicated supply chains, leaving the central bank balancing inflation risks against fears of an economic slowdown.

The next Fed meeting is scheduled for late September, when policymakers will reassess whether ongoing trade tensions and mixed growth data warrant a change in rates.

With input from Al Jazeera