The U.S. Federal Reserve has once again opted to maintain its benchmark interest rate between 4.25% and 4.50%, resisting mounting political pressure from former President Donald Trump and signaling caution amid rising inflation risks.
This decision marks the fourth consecutive meeting where the Fed has chosen not to adjust rates.
Despite growing political noise, including Trump’s latest outburst labeling Fed Chair Jerome Powell “stupid,” the central bank emphasized its intent to wait for clearer economic signals before acting.
According to the Fed’s post-meeting statement, while uncertainty surrounding the U.S. economic outlook has diminished, it remains significant. Chair Powell indicated that further assessment of tariff impacts—especially recent 10% import levies imposed by Trump—is necessary before considering rate cuts.
“We’ll make smarter and better decisions if we just wait a couple of months,” Powell said, adding that the summer would provide more clarity on inflation and consumer trends.
Despite no immediate rate cuts, the Fed’s updated projections still suggest two potential rate reductions in 2025. However, divisions among officials are growing, with fewer expecting multiple cuts amid higher inflation and reduced economic growth forecasts.
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Trump, speaking from the White House hours before the announcement, blasted the Fed’s decision, arguing that inflation was under control and rate cuts were overdue. “We have no inflation, only success,” Trump said. “Maybe I should go to the Fed. Am I allowed to appoint myself?”
Economic analysts say the Fed’s stance is justified. KPMG economist Diane Swonk noted, “There is a strong argument that absent the tariff-induced inflation, the Fed would be cutting rates now.”
Meanwhile, the Fed adjusted its 2025 outlook, lowering projected GDP growth from 1.7% to 1.4%, and raising its inflation forecast to 3.0%, with unemployment expected to rise to 4.5%.
As global geopolitical tensions rise, including the ongoing conflict between Israel and Iran, Powell admitted energy prices could climb, but played down the likelihood of lasting inflationary impact.
The Fed’s cautious pause appears aimed at balancing economic uncertainty with political independence, as Trump’s rhetoric escalates ahead of a likely 2024 election rematch.
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