The Federal Reserve on Wednesday kept its benchmark interest rate unchanged, maintaining the range between 4.25% and 4.50% after its two-day policy meeting. Officials signaled that two rate cuts remain likely this year, in line with previous projections, but adjusted their economic outlook with more caution.
The decision came amid growing political pressure from former President Donald Trump, who has repeatedly criticized the Fed and Chair Jerome Powell for not acting swiftly to lower rates. Hours before the Fed’s announcement, Trump launched another verbal attack, calling Powell “stupid” and questioning the Fed’s judgment.
“We have a stupid person, frankly, at the Fed,” Trump said from the White House. “We have no inflation, we have only success, and I’d like to see interest rates get down. Maybe I should go to the Fed. Am I allowed to appoint myself?”
In its official statement, the Fed acknowledged that “uncertainty about the economic outlook has diminished but remains elevated.” The central bank also lowered its forecast for 2025 GDP growth from 1.7% to 1.4%, while raising its inflation outlook to 3.0% and unemployment forecast to 4.5%.
The move to hold rates steady was widely anticipated by analysts, who expected the Fed to adopt a cautious, wait-and-see stance as it monitors the economic impact of Trump’s aggressive tariff policies and rising global tensions — including in the Middle East.
Although Trump continues to argue there’s no risk of inflation — despite imposing broad tariffs on steel, aluminum, autos, and other imports — economists caution that price pressures could take months to materialize. Many businesses are currently absorbing costs through existing inventories to avoid passing price hikes on to consumers.
Benjamin Shoesmith, senior economist at KPMG, noted that “the Fed would likely be cutting again by now if not for the uncertainty surrounding tariffs and the recent escalation of geopolitical tensions.” He added that the central bank wants to see whether inflationary pressures persist.
Despite Trump’s ongoing efforts to influence the Fed — including branding Powell “too late” and “a fool” at previous meetings — Fed Chair Powell has reiterated the institution’s commitment to nonpartisan, data-driven policymaking. In past meetings with Trump, Powell has firmly defended the independence of the U.S. central bank.
Dan North, senior economist at Allianz Trade North America, said Powell is unlikely to be swayed by political “saber-rattling,” adding that the Fed remains focused on long-term economic stability rather than short-term political demands.
