Federal Reserve Maintains Interest Rates Despite Presidential Pressure
The Federal Reserve, in a 9-2 vote, chose to keep interest rates unchanged at 4.25%-4.5% on Wednesday. This decision marks the fifth consecutive meeting where the benchmark rate has been maintained, despite significant pressure from President Trump to reduce borrowing costs.
Fed Chair Jerome Powell highlighted the central bank’s independence during his remarks. He also mentioned that most committee members anticipate that rate cuts will be necessary “fairly soon.”
In a rare event, two Fed governors – Michelle Bowman and Christopher Waller, both appointed by Trump – disagreed with the decision. This marks the first instance of multiple governors dissenting since 1993.
The decision comes amidst a period of heightened economic uncertainty. Policymakers are closely monitoring the effects of Trump’s tariffs on inflation and economic activity.
Powell stated that the Fed has “made no decisions about September” regarding potential rate cuts. He emphasized that future decisions will be heavily influenced by employment and inflation data.
The announcement came on the heels of stronger-than-expected GDP growth of 3% in the second quarter. However, Powell noted that the underlying economic momentum remains mixed.
President Trump has been a vocal critic of Powell, even assigning him the nickname “Too Late” for not cutting rates more aggressively. Following Powell’s cautious comments about future policy moves, markets reacted by reducing September rate cut odds from 64% to 46%.
Source: NPR