Fed Defends Dollar, Resists Trump, Stays Strong
Federal Reserve poised to keep rates unchanged
The US central bank is anticipated to hold interest rates steady at the conclusion of a two‑day policy session, as the ripple effects of President Donald Trump’s recent tariff announcements begin to surface.
Key expectations
- Rates are likely to remain between 4.25 % and 4.50 %, with no reduction scheduled for this cycle.
- Analysts foresee two potential dissents among Fed policymakers, reflecting divergent views on when a rate cut might become viable.
- Trump has repeatedly called for a three‑percentage‑point drop, a stance that the Fed is expected to sidestep.
Tariff‑related price pressures
Recent data suggest that tariff‑induced cost inflations are starting to filter through the economy:
- Companies report lower earnings and higher input costs.
- Elevated consumer prices are beginning to weigh on retail sales.
- Forecasters predict that demand erosion could intensify in the coming months.
Future policy outlook
Scholars highlight that the Fed’s next strategic pivot will hinge on data leading up to its annual conference in Jackson Hole, Wyoming:
- Whether the Fed will open the door to a September rate cut will depend on the data accumulated by that time.
- Jerome Powell is expected to adopt a tone of cautious patience when addressing the market at the conference.
Potential implications
While the Fed’s decision may shield the central bank from immediate political pressure, the presence of multiple dissents could fuel renewed criticism from Trump, who fears that the policy stance may signal an internal loss of confidence in the Fed Chair’s leadership.
