On Wednesday, the US Federal Reserve maintained its benchmark rate at 4.25% – 4.5%. This is the third meeting in a row that the Fed has kept the interest rates unchanged.
This decision was made in response to President Donald Trump’s increasing pressure, who had repeatedly called for aggressive rate reductions as a way of counterbalancing the impact of the new import tariffs imposed by his administration.
The Fed chose monetary stability to a policy change that was reacted upon, despite the heated political climate.
Fed officials’ unanimous decision to maintain interest rates reflects their caution about the changing US economic outlook.
The official acknowledged that the uncertainty “increased even further” despite the fact that overall economic growth continued at “a solid pace.”
The latest data however offers mixed signals.
The first US GDP report in three years showed that the US economy shrank in the first quarter 2025. This was largely due to an increase in imports before Trump announced his tariffs.
The Fed has noted that while some sectors are resilient, risks associated with unemployment and inflation have grown.
According to the April jobs report, there has been no change in the labor market, and unemployment rates have stabilized at low levels.
Even so, the policymakers continue to closely monitor for any signs of tension.
The inflation rate remains high despite cooling signs
The Fed also continues to place a high priority on inflation.
The central bank’s preferred measure of inflation showed a year-over-year decrease in prices to 2.6% by March. However, a broader measure for first-quarter was higher than expected at 3.5%.
The Fed is still cautious, as both figures are above its 2% goal.
Fed chair Jerome Powell, along with other Fed officials, have repeatedly stressed the importance of making decisions based on data. This is especially true in an environment marked by uncertainty and volatility.
As Trump’s tariffs start to be implemented, the central bank is trying to strike a balance between inflation control and economic support.
Trump attacks Fed and demands rate reduction
The Fed has been a source of frustration for President Trump.
He launched in recent weeks a campaign to reduce interest rates immediately, saying that it was necessary to avoid a possible economic slowdown.
Trump criticised Powell personally, calling him “a total stiff” and a “major loser” in an article on Truth Social.
Trump wrote on April 21, “There could be a slowing of the economy, unless Mr. Too late, a big loser, lowers rates NOW.”
Powell was even tipped off that Powell would be removed, but he later clarified his intention to allow Powell’s term as Fed chair, which expires in May 2026, to run out.
The post US Fed maintains interest rates and resists Trump’s pressure amid increasing economic uncertainty could be updated as new information unfolds.
