The US Federal Reserve kept interest rates unchanged for the fourth consecutive meeting on Wednesday, citing rising inflation, slower growth, and growing uncertainty due to President Donald Trump’s sweeping tariffs and global instability.
Fed Chair Jerome Powell said the central bank was in a strong position to wait and assess how tariffs would affect inflation, hiring, and consumer spending — suggesting a rate cut may not come soon.
“We’ll make smarter and better decisions if we just wait a couple of months,” Powell said during a press conference.
No Cuts Yet Despite Economic Strains
At the end of its two-day meeting, the Fed left its benchmark interest rate between 4.25% and 4.50%, maintaining its earlier projection of two rate cuts this year. However, internal disagreement is growing, with fewer officials expecting multiple cuts.
The Fed also lowered its forecast for US economic growth in 2025 from 1.7% to 1.4%, while raising projections for inflation to 3.0% and unemployment to 4.5%.
“Tariff increases are likely to push up prices and weigh on economic activity,” Powell warned.
Trump Attacks Powell Over Inaction
President Trump lashed out at Powell ahead of the Fed’s announcement, calling him “stupid” for not slashing rates and joking that he might appoint himself as Fed Chair.
“We have no inflation, only success, and I’d like to see interest rates come down,” Trump said from the White House.
Trump has consistently pressured the independent central bank to cut rates, most recently claiming such a move would lower debt costs — despite lower rates typically driving prices higher.
Analysts Say Fed Playing Safe
Financial markets reacted calmly, with major US indexes ending the day mostly unchanged. Economists broadly supported the Fed’s cautious stance.
Diane Swonk, chief economist at KPMG, said the central bank was unlikely to act before September unless there was a sharp economic shift.
Ryan Sweet of Oxford Economics added that any rate cut would depend on clear evidence that inflation is returning to the Fed’s 2% target, noting:
“Preemptive cuts don’t appear to be on the table.”
Global Risks Add to Fed’s Wait-and-See Approach
Powell acknowledged that conflict in the Middle East, particularly the clash between Israel and Iran, could lead to higher energy prices. However, he said these were unlikely to have a lasting impact on US inflation.
He concluded by reaffirming the Fed’s commitment to making decisions based on non-political and objective analysis, despite external pressures.
“We’re well-positioned to wait to learn more before changing interest rates,” Powell said.