US Fed meeting: Jerome Powell-led US Federal Reserve keeps rates unchanged; defies Donald Trump’s call for cut
US Fed Meeting: The US Federal Reserve, led by chair Jerome Powell, kept interest rates unchanged at its monetary policy meeting on Wednesday, defying President Donald Trump’s call for a rate cut.“In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective,” the US Federal Reserve statement reads.The US central bank has maintained its key interest rate steady in the current year, ranging between 4.25 percent and 4.50 percent. Market observers had widely anticipated that Fed officials will maintain their current position until inflation shows consistent signs of moderation.
US Fed Meeting: Top Highlights & Takeaways
- Recent economic indicators point towards sustained robust growth in economic activity, despite fluctuations in net exports affecting the data, the policy statement said.
- Labour market stability persists with low unemployment rates and steady employment conditions. Price levels continue to show moderate elevation, it said.
- Whilst economic uncertainty has decreased, it still remains elevated. The Committee maintains vigilance regarding risks to both aspects of its dual mandate.
- The Committee continues to evaluate incoming data’s implications for economic prospects whilst determining suitable monetary policy stance. Should any risks surface that might hinder achieving the Committee’s objectives, they stand ready to modify monetary policy accordingly. The evaluations encompass diverse factors, including labour market status, inflation metrics and expectations, alongside financial and global economic trends, the statement added.
US Fed Chair Defies Donald Trump
During the Federal Reserve’s second day of meetings, Trump intensified his demands for interest rate cuts, directing criticism at Federal Reserve Chairman Powell whilst dismissing inflation concerns.“We have a stupid person, frankly, at the Fed, he probably won’t cut today,” Trump remarked about Powell, making these comments just hours before the Federal Reserve’s scheduled announcement.“We have no inflation, we have only success, and I’d like to see interest rates get down,” he continued whilst speaking at the White House. “Maybe I should go to the Fed. Am I allowed to appoint myself?”Inflation has shown a downward trend since January, and economic experts indicate that without elevated import duties, the Federal Reserve would be implementing further rate reductions.The Trump administration has intensified its criticism of Powell regarding borrowing costs, with Trump directly referring to the Fed chair as a “numbskull” for not implementing cuts. Additional administration officials, including Vice President JD Vance and Commerce Secretary Howard Lutnick, have joined in advocating for rate reductions.Economists express concern when there is pressure on the Fed to reduce rates solely to decrease government interest payments, as this could compromise the Fed’s congressional responsibility to maintain price stability and maximum employment.Trump has expressed dissatisfaction that the Fed maintains rates whilst other global central banks have decreased their borrowing costs, including those in Europe, Canada, and the UK. On Tuesday, the Bank of Japan maintained its short-term rate at 0.5%, following a recent increase.The European Central Bank, Bank of Canada, and Bank of England have implemented rate reductions this year partly due to US tariffs affecting their economies. Meanwhile, the US economy remains predominantly robust, with low unemployment levels.
