The US Federal Reserve kept its benchmark interest rate unchanged on Wednesday, maintaining the range of 4.25% to 4.5% for the third consecutive meeting.
The central bank’s decision comes in the face of mounting pressure from President Donald Trump, who has repeatedly demanded aggressive rate cuts to counterbalance the effects of his administration’s new wave of import tariffs.
Despite the political heat, the Fed signaled growing concerns over economic uncertainty and inflation risks, opting for monetary stability over a reactionary policy shift.
The unanimous decision by Fed policymakers to hold interest rates steady reflects caution over the evolving US economic outlook.
Officials acknowledged that uncertainty had “increased further,” even as the broader economy continued to expand at a “solid pace.”
Recent data, however, offered mixed signals.
A GDP report showed the US economy contracted in the first quarter of 2025—the first contraction in three years—largely attributed to a rush in imports ahead of Trump’s tariff rollout.
While some sectors remain resilient, the Fed noted that potential risks tied to unemployment and inflation are growing.
The labor market has held firm, with the unemployment rate stabilizing at low levels, according to April’s jobs report.
Still, policymakers are closely watching for signs of strain.
Inflation remains a concern despite signs of cooling
Inflation also remains a central issue in the Fed’s calculus.
Although the central bank’s preferred inflation gauge showed year-over-year price growth slowing to 2.6% in March, the broader measure for the first quarter was a hotter-than-expected 3.5%.
Both figures remain above the Fed’s 2% target, reinforcing its cautious approach.
Fed Chair Jerome Powell and other officials have consistently emphasized the importance of data-driven decisions, particularly amid an uncertain trade environment and geopolitical volatility.
The central bank is aiming to balance inflation control with economic support, especially as Trump’s tariffs begin to take effect.
Trump lashes out at Fed, demands rate cuts
President Trump has made no secret of his frustration with the Fed’s restraint.
In recent weeks, he launched a public campaign calling for immediate interest rate cuts, framing the move as necessary to prevent a potential economic slowdown.
Trump criticized Powell in personal terms, calling him a “total stiff” and “major loser” in a post on Truth Social.
“There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump posted on April 21.
He even hinted at removing Powell, later clarifying that he intends to let the Fed Chair complete his term, which ends in May 2026.
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