Federal Reserve Maintains Interest Rates Despite Governor Objections - Trump Administration Expresses Disapproval - Fed Reserve maintains interest rates status quo - Trump admin officials express discord
US Federal Reserve Maintains Steady Course Amid Dissent
The Federal Reserve, the US central bank, has kept interest rates unchanged, despite pressure from President Trump to lower them. The decision was made by the Federal Open Market Committee (FOMC), the policy-making body of the Federal Reserve System, which met this week.
The US government recently announced that the gross domestic product (GDP) increased by 3.0% on an annualized basis in the second quarter. However, the Fed has maintained a cautious stance, citing concerns over inflation and economic uncertainty related to Trump's tariff policies.
Two members of the FOMC, Michelle Bowman and Christopher Waller, dissented from the decision. Both Bowman and Waller are members of the Board of Governors of the Federal Reserve System, and were appointed by President Trump. This marks the first time since 1993 that two Governors have opposed the Chair's stance simultaneously, highlighting internal debate on the appropriate policy response amid economic uncertainties.
President Trump has been publicly criticizing Jerome Powell, the Chair of the Federal Reserve System. Trump has threatened to fire Powell multiple times, raising questions about the independence of the central bank. Trump's influence has not resulted in the Federal Reserve lowering interest rates, despite his repeated public pressure and harsh personal attacks on Powell.
Trump, on his online service Truth Social, called for a rate cut, stating, "Let people buy and refinance their homes." However, the Fed has emphasized its independence and signaled a "wait-and-see" approach. This includes holding rates steady for at least seven consecutive months in 2025, prioritizing control of inflation risks and monitoring trade tensions.
The FOMC had been deliberating since Tuesday. In the midst of this decision, Trump has referred to Powell as a "fool", "idiot", and "loser". Despite this, the Fed has remained focused on its mandate to promote maximum employment, stable prices, and moderate long-term interest rates.
In summary, while President Trump has aggressively campaigned for lower interest rates and openly criticized Powell, the Federal Reserve has largely resisted this pressure, keeping rates unchanged to balance inflation concerns and economic stability. Internal dissent suggests some voices support rate cuts, but the institution's overall direction reflects independence and caution.
- Despite President Trump's pressure to lower interest rates, his appointees Michelle Bowman and Christopher Waller at the Federal Reserve dissented from the decision to keep rates unchanged, marking the first time since 1993 that two Governors have opposed the Chair's stance simultaneously.
- Amidst political tension between President Trump and Fed Chair Jerome Powell, the US Federal Reserve, under Powell's leadership, has emphasized its independence and signaled a "wait-and-see" approach to interest rates, focusing on promoting maximum employment, stable prices, and moderate long-term interest rates.
