The Federal Reserve kept its benchmark interest rate unchanged on Wednesday, marking the third straight meeting without a rate change. The decision came despite mounting pressure from President Trump, who has publicly urged the central bank to lower rates as his administration imposes sweeping new tariffs.
Policymakers voted unanimously to maintain the Fed’s benchmark interest rate in the range of 4.25% to 4.5%, where it has stood since the end of 2024 after a full percentage-point rate cut last fall.
Powell: No Need to Rush
Fed Chair Jerome Powell emphasized a cautious approach in his press conference following the decision.
“I don’t think we can say which way this will shake out,” he said, referring to how tariffs might impact the economy.
Powell added, “My gut tells me that uncertainty for the path of the economy is extremely elevated,” pointing specifically to concerns about inflation, employment, and ongoing trade talks.
He stressed that the Fed “does not need to be in a hurry” and will take time in the coming months to assess how economic conditions evolve.
Economic Uncertainty on the Rise
In its policy statement, the central bank acknowledged that “uncertainty about the economic outlook has increased further.” Still, the Fed noted that the broader U.S. economy continues to grow at a “solid pace,” even as recent data were skewed by volatility in net exports.
A recent GDP report showed a contraction in the first quarter of 2025 — the first economic shrinkage in three years — driven largely by a surge in imports ahead of Trump’s tariffs taking effect.
Labor Market Holding Up — For Now
Despite economic headwinds, the Fed maintained its view that the job market remains “solid.” Officials pointed to a stable unemployment rate and recent employment data.
An April jobs report released last Friday showed that the labor market remained resilient even after Trump’s “Liberation Day” trade policy announcements sent shockwaves through global markets.
Trump’s Public Campaign for Rate Cuts
President Trump has openly criticized Powell and the Fed in recent weeks, calling for swift interest rate cuts to offset the economic fallout from his trade measures. He took to his social media platform, Truth Social, on April 21 to demand “preemptive cuts,” warning of an economic “SLOWING” and referring to Powell as “Mr. Too Late” and “a major loser.”
“There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump posted.
He further said Powell’s “termination can’t come fast enough,” though he later clarified that he did not plan to remove Powell before his term ends in May 2026.
Powell Unfazed by Presidential Pressure
Powell responded to Trump’s comments with restraint, stating that such remarks “doesn’t affect doing our job at all.” He reiterated that the Fed’s decisions are based on economic data, not political pressure.
Balancing Inflation and Jobs
Looking ahead, Powell acknowledged that the Fed may eventually face a difficult choice if inflation and employment trends diverge — a challenge the Fed hasn’t confronted in many years.
“We haven’t faced that question in a very long time,” he said. “But it’s not one that we face today, and we may never face it. Nevertheless, we have to keep it in our thinking.”
For now, the Fed is staying the course, watching carefully as trade policies unfold and economic indicators provide more clarity.
