In its latest policy meeting, the Federal Reserve chose to keep interest rates unchanged, maintaining the current range of 4.25% to 4.50%. This marks the fifth consecutive month with no adjustments—neither an increase nor a decrease—in rates. Despite growing pressure from President Donald Trump for a rate cut, the Fed remains cautious, with Chair Jerome Powell emphasizing persistent inflation risks.
The decision follows heightened economic unease sparked by the “America-First” tariff initiative introduced earlier this year in April. In light of the ongoing inflation battle, the Fed continues to take a conservative stance, opting to monitor conditions closely before making any major policy shifts.
Recent figures from the Treasury reveal that inflation rose again in June, reaching 2.7%—the highest rate seen since February. This uptick, which followed a 2.4% reading in May, aligned with market forecasts and reinforced the Fed’s reluctance to lower rates prematurely. However, President Trump and his team insist the economy is strong enough to handle a rate cut and argue that current monetary policy is holding back growth. Trump has openly criticized Powell’s leadership, even hinting that he should resign over the Fed’s refusal to act.
This stalemate between the White House and the Federal Reserve could have deeper implications. Speculation is growing that Trump may consider replacing Powell, whom he originally appointed during his first term. A new Fed chief could potentially take a more aggressive approach and implement rate cuts before the end of the year.
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