US Fed holds firm against Trump pressure to cut rates, despite dissension

The US Federal Reserve kept interest rates unchanged for a fifth us fed holds firm against consecutive policy meeting on Wednesday. Meanwhile, July 30, defying strong political pressure from President Donald Trump to slash borrowing costs – although divisions emerged among policymakers. Therefore, The US central bank’s call to hold interest rates at a range between 4.25% and 4.50% comes amid a flurry of data releases this week. Furthermore, including an early estimate showing the world’s biggest economy returned to growth in the second quarter.

Yet that uptick was heavily influenced by a pullback in imports after businesses rushed to stockpile inventory. Therefore, ahead of Trump’s expected tariffs in the first quarter. For example, Companies are citing weaker earnings and higher input costs, while elevated consumer prices are beginning to weigh on retail sales. Fed policymakers are also expected to have considered an incoming raft of new tariff rates that Trump has promised. to impose on Friday.

During a news conference. Chair us fed holds firm against Jerome Powell said that Trump’s sweeping tariffs are starting to push up inflation and it will take time for the Fed to determine whether the uptick in prices will be a one-time effect or something more persistent. “That is a risk to be assessed and managed,” he told reporters.

There were some signs of splits in the Fed’s ranks: Governors Christopher Waller. Michelle Bowman voted to reduce borrowing costs, while nine officials, including Powell, favored standing pat. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn’t vote.

‘A long way to go’ – Us fed holds firm against

The choice to hold off on a rate cut will almost certainly result in further conflict between the Fed. White House, as Trump has repeatedly demanded that the central bank reduce borrowing costs as us fed holds firm against part of his effort to assert control over one of the few remaining independent federal agencies.

Powell said that while tariffs are starting to push up the cost of goods –. he expects more of that to happen in the coming months – the price of services – rents, insurance, and hotel rooms – has continued to cool. He suggested it could take some time to determine whether the impact of the tariffs will be short-lived. more persistent.

“We think we have a long way to go to really understand exactly how” the tariffs. prices will play out, Powell said. Many economists. Wall Street investors have expected the Fed to cut its rate at its next meeting in September, but Powell’s remarks suggest there may not be enough data before September to support a cut. “We have made no decisions about September,” Powell added.

Meanwhile. in announcing its decision Wednesday, the bank said: “Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year.” “Uncertainty about the economic outlook remains elevated. ” as does inflation, the Fed added in its statement at the end of its two-day policy gathering.

Two dissenting governors

The decision came with two dissents from Fed Governors Christopher Waller. Michelle Bowman, who had previously signaled openness to a July rate cut. Waller flagged this month that indicators do not point to a particularly healthy private sector jobs market. He has made the case for a July cut and stressed that policymakers need to respond to us fed holds firm against real-time data.

While disagreements among the rate-setting Federal Open Market Committee were expected by financial markets. analysts have noted that it marks the first time since 1993 that there have been dissents by two governors.

The outcome of unchanged rates was sure to anger Trump. who has lashed out repeatedly at independent Fed Chair Jerome Powell for not lowering levels sooner – calling him “too late,” a “numbskull” and “moron.” Trump, citing Wednesday’s better than expected GDP growth figures, earlier said Powell “must now lower the rate.” Trump has called for interest rates to be dropped by as much as three percentage points.

The repeated attacks have fueled speculation that Trump may attempt to fire Powell or otherwise pressure him us fed holds firm against to resign early. Powell’s term as Fed Chair ends in May 2026.