The decision also elicited dissent from both the appointees of President Donald Trump, the first in more than 30 years, and two central bank governors.
Despite pressure from the White House, the US Federal Reserve stabilizes interest rates at 4.25-4.50%, with tariff-driven uncertainty focusing on the US economy, on par with economists’ expectations.
The US Central Bank Fed announced its decision on Wednesday, compiling a two-day policy meeting.
“The committee is looking to achieve the largest employment and inflation at a 2% rate over the long term. Uncertainty about the economic outlook continues to rise,” the Fed said in a statement.
Prices have been stable at this rate since December. Federal Reserve Chairman Jerome Powell has long argued that by maintaining the rate consistently, central banks are in a strong position to respond to inflationary pressures pushed by US President Donald Trump’s tariffs.
“Recent indicators suggest that economic activity growth has eased in the first half of the year. Unemployment rates remained low, labor market conditions remained strong. Inflation remains somewhat rising,” the Fed added.
Inflation reached up to 2.7%, according to a consumer price index report released earlier this month.
However, the decision also elicited opposition from the two central bank governors. Both Trump appointees are Trump appointees who agree that monetary policy is too strict.
This week’s meeting will win over 30 years of two members of the federal government’s seven Washington-based governor voted against a consensus-led central bank rate decision, and will discuss how Trump’s public pressure is being played at an institution designed to set up independent monetary policy on demands from elected civil servants.
Directors Vice-Chair Michelle Bowman and Gov. Christopher Waller are mentioned as candidates who could replace Powell when his term expires in May 2026.
Pressure on Powell
Last week, the US president claimed that after visiting the Fed’s headquarters, he thought the central bank was ready to cut interest rates.
“There’s no further excuse. Now is the time for Powell to cut his fees,” the White House said in a statement before the announcement of the rate decision and shortly after the mixing of GDP data on Wednesday. “He said.
The claims are the latest in numerous attempts by the White House to pressure the central bank on lower fees, including the threat of Powell’s replacement and the ongoing personal attacks on the Fed chair. Last week, Trump called Powell “Numbskull.”
However, Powell has long argued that central bank decisions on monetary policy should be independent of political pressure.
In response to a question about whether federal needs will be considered in future policy decisions, Powell said, “We don’t take into account the federal financial needs. The central banks in advanced economies won’t.”
If the central bank takes that into consideration, it would undermine the credibility of both the central bank and the US fiscal policy, he said.
