Fed refuses Trump pressure, plans to keep rate cuts on hold.

Federal Reserve Faces Trump‑Driven Rate‑Cut Push

President Trump Urges Lower Interest Rates

In a bold move, President Donald Trump has intensified pressure on Federal Reserve Chair Jerome Powell, demanding a significant drop in the U.S. benchmark lending rate. The U.S. central bank is expected to hold off on any major rate cuts at its next meeting, as Trump’s tariff strategy continues to influence the country’s economic outlook.

Tariff Campaign and Inflation Monitoring

• Trump’s sweeping tariffs have reached nearly all global trade partners, with higher levies on steel, aluminum, and automobiles.
• The Federal Reserve has kept the overnight rate steady at 4.25%–4.50% while awaiting the summer’s inflation data.
• Fed officials aim to balance inflation control with a healthy jobs market.

Powell’s Data‑Driven Approach Holds Back Political Pressure

Despite Trump’s repeated criticisms of Powell as a “numbskull” and “moron,” the Fed’s policy‑making remains data‑dependent. Economists anticipate the Fed will look past the president’s political pressure during its upcoming policy meeting.

Trump’s “Trial Balloon” for Powell Ou
anish

Trump recently signaled he could use the Fed’s $2.5 billion renovation project as a potential avenue to oust Powell, before backing off. His tense visit to the construction site highlighted the political friction between the president and the Fed chair.

Economic Outlook and Fed Reactions

Chief U.S. economist at Oxford Economics, Ryan Sweet, noted the evidence of tariffs on inflation will become clearer in July and August, suggesting a likely pause in Fed rate cuts.

Labor Market Fissures and Fed Policy Disruptions

• Some Fed members may break ranks if the Fed’s rate‑setting committee decides to keep interest rates unchanged for a fifth straight meeting.
• Key figures such as Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman have signaled openness to early rate cuts, potentially creating dissent.
• Economists anticipate the labor market weakness, as hiring rates remain below average and permanent job losers rise.

Powell’s Term and Potential Fed Board Shifts

Powell’s term as Fed chair ends in May 2026. Analysts expect the board to remain independent, following Trump’s brief “trial balloon” of ousting Powell, which ultimately was retracted.

Summary

As Trump pushes for lower rates while the Fed prioritizes data, the upcoming policy meeting will likely reaffirm the committee’s stance on maintaining steady rates, balancing inflation expectations with the evolving labor market conditions.