The Federal Reserve held rates steady Wednesday as stubborn inflation remains above the central bank’s target of 2%.
• It’s the first key decision from the central bank under President Donald Trump’s second term, and comes after Trump said he should have some say in Fed policy.
• Fed officials must now determine whether today’s expected pause is a one-meeting hold or the start of a longer stretch.
• While the job market is slowing but stable and inflation is mostly lower, Trump’s economic policies and geopolitical threats could lead to higher prices, some economists say.
• That could lead the Fed to continue holding off on any rate cuts this year, or even raise rates.
President Donald Trump’s “demand” that interest rates come down further was not met on Wednesday, when the Federal Reserve instead decided to hold rates steady. This decision followed three back-to-back meetings with rate cuts in the months before Trump took office.
Hours after the Fed announced its decision, Trump, who appointed Fed Chair Jerome Powell in his first term, accused the central bank of failing “to stop the problem they created with Inflation,” he wrote in a post on Truth Social. “I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing,” Trump wrote.
He also said the central bank has “done a terrible job on Bank Regulation” and will put that responsibility entirely in the hands of the Treasury Department. It’s not clear if Trump is legally able to strip the Fed of its longstanding authority on banking regulation, however.
Powell, meanwhile, had little to say about recent comments Trump has made about the Fed.
“I am not going to have any response or comment whatsoever on what the president said,” Powell told reporters at a news conference Wednesday after the Fed’s monetary policy meeting. “It is not appropriate for me to do so.”
He also advocated for the central bank’s independence, as Trump pushes for the opposite. “That will give us the best possible chance to achieve these goals for the benefit of the American people,” he said, referring to the Fed’s dual mandate for stable prices and maximum employment. “People should have confidence in that.”