The Federal Reserve decided to keep interest rates unchanged on Wednesday (July 30), despite pressure from President Donald Trump to lower them. The federal funds rate remains between 4.25% and 4.5%, maintaining the level set to counter pandemic-era inflation. The decision comes after a government report showed stronger-than-expected economic growth for the three months ending in June.

President Trump has been vocal about his desire for a rate cut, arguing it would boost economic performance and reduce government debt interest payments. He even made an unusual visit to the Federal Reserve, urging a reduction in rates. However, the Federal Open Market Committee (FOMC) noted that inflation remains "somewhat elevated" and expressed concerns about economic uncertainty, especially with ongoing tariffs affecting the outlook.

Two Fed governors, Michelle Bowman and Christopher Waller, both appointed by President Trump, dissented from the decision, preferring a quarter-point rate cut. This marks the first time since 1993 that two governors have voted against the majority. The Fed's decision also follows criticism from Trump regarding the central bank's $2.5 billion building renovation project, which he cited as an example of cost overruns.

Federal Reserve Chair Jerome Powell, whose term expires in May 2026, has stated that the Fed's decisions are guided by a dual mandate to control inflation and maximize employment. While the Fed has forecasted potential rate cuts later in 2025, Powell has emphasized that any changes will depend on evolving economic data.

Despite Trump's criticisms, the Fed remains an independent agency, and the president is legally barred from appointing himself as head of the central bank. Federal law allows for the removal of the Fed chair for "cause," but no president has ever exercised this option.

Sitemap