The U.S. Federal Reserve has kept interest rates unchanged, resisting political pressure from former President Donald Trump, who has been vocal in demanding a rate cut to stimulate the economy.
The decision, announced Wednesday after the Federal Open Market Committee (FOMC) meeting, leaves the benchmark federal funds rate steady between 4.25% and 4.5%, maintaining the current stance adopted since the last rate move seven months ago.
In its statement, the Fed cited ongoing uncertainty, noting, “Uncertainty about the economic outlook remains elevated,” as policymakers continue to weigh the impact of tariffs and broader market conditions.
Two Trump-appointed Fed governors, Michelle Bowman and Christopher Waller; dissented from the committee’s decision, favoring a 25-basis-point cut. Their opposition marked the first time since 1993 that two sitting governors have broken ranks with the majority in a single vote.
Despite Trump’s continued criticism of the Fed’s approach, the central bank has emphasized its independence and commitment to its dual mandate of price stability and maximum employment.
The rate decision follows a rare and controversial visit by Trump to the central bank, during which he called for lower interest rates to reduce government debt payments and spur economic performance.
“We have a man who just refuses to lower the Fed rate,” Trump said of Fed Chair Jerome Powell last month. “Maybe I should go to the Fed. Am I allowed to appoint myself? I’d do a much better job than these people.”
Though federal law allows a president to remove the Fed chair for cause, no U.S. president has ever exercised that power. Powell’s current term runs through May 2026, and he is legally shielded from political interference.
The Fed’s decision came just hours after new government data revealed better-than-expected economic growth for the quarter ending in June. However, analysts cautioned that part of the strong performance was due to a statistical anomaly rather than broad-based economic strength.
While robust growth typically reduces the urgency for monetary easing, Trump has continued to advocate for a rate cut. In addition to criticizing Powell’s leadership, Trump has also condemned cost overruns on the Fed’s $2.5 billion building renovation, which the bank attributed to unforeseen inflation and construction costs. The Fed said the project will allow operational consolidation and reduce long-term expenses.
Though inflation in June was driven primarily by housing and food prices, analysts noted that tariffs had a modest impact. Importers, facing increased tax burdens, often pass costs to consumers, potentially rekindling inflation, a key concern for the Fed.
Despite keeping rates steady this month, the Fed’s June forecast indicated plans for two potential quarter-point cuts before the end of 2025, reiterating earlier guidance from March.
Fed Chair Powell has maintained a cautious tone, emphasizing data-dependence in future decisions. Speaking at the European Central Bank Forum in Sintra, Portugal earlier this month, Powell said: “I wouldn’t take any meeting off the table or put any on the table. It depends on how the data evolve.”
