Fed holds interest rates steady amid White House pressure

Federal Reserve policymakers voted 9-2 on Wednesday to keep interest rates steady at 4.25% to 4.5%, marking the fifth consecutive meeting without a change.

The move also comes amid mounting pressure from President Donald Trump to cut borrowing costs.

However, two Fed officials—Michelle Bowman and Christopher Waller—dissented, calling for an immediate rate cut. It marked the first time since 1993 that more than one board governor opposed the Fed’s decision.

Powell said the Fed will await clearer data before considering any rate changes. The rare opposition underscored emerging divisions as policymakers navigate tariff-driven inflation and economic uncertainty.

Political pressure meets policy caution
Despite personal attacks from Trump, Chair Jerome Powell emphasized that the Fed remains cautious about acting too soon and reigniting inflation. He stressed the importance of acting “efficiently,” not hastily, to avoid harming the labor market.

Investors now anticipate a possible rate cut at the Fed’s September meeting.

Mixed economic signals fuel uncertainty
While GDP rose 3% last quarter, private demand slowed to 1.2%. Tariffs have begun pushing up consumer prices, although overall inflation remains modest.