Powell Holds Rates As Trump Pressures Federal Reserve/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Fed Chair Jerome Powell is sticking with his cautious “wait and see” approach on interest rates. President Trump continues ramping up pressure for immediate cuts to borrowing costs. Powell warns the Fed needs time to gauge the economic fallout from new tariffs.
Powell Defies Trump Pressure Quick Look
- Powell signals no imminent rate cuts despite political pressure.
- Trump criticizes the Fed for failing to lower rates.
- Fed wants clarity on tariffs’ impact on inflation and growth.
- Powell spoke from a conference in Sintra, Portugal.
- The Fed’s key rate remains around 4.3% after cuts in 2024.
- Fed Governors Waller and Bowman hint at possible July cuts.
- Trump’s attacks extend to the broader Fed board.
- Powell’s term as Fed chair ends in May 2026.
Powell Holds Rates As Trump Pressures Federal Reserve
Deep Look
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell stood firm Tuesday on maintaining interest rates, resisting intensifying pressure from President Donald Trump, who continues to demand rate cuts to ease federal borrowing costs.
Speaking at a conference in Sintra, Portugal, Powell repeated that the Fed would keep its key rate steady while assessing how Trump’s sweeping tariffs might affect the economy. He acknowledged that inflation could accelerate later this summer, but said uncertainty remains around how significant any price increases might be.
“As long as the economy is in solid shape, we think the prudent thing to do is to wait and see what those effects might be,” Powell said, referring to the tariffs imposed this year.
Trump, undeterred, escalated his criticism of Powell and the entire Federal Reserve board, accusing them of inaction that he argues is driving up interest costs on the government’s debt.
“The board just sits there and watches, so they are equally to blame,” Trump said on Monday. His broad attack also increases scrutiny on individual Fed officials, including Governor Chris Waller, who has been floated as a possible replacement when Powell’s term expires in May 2026.
The Fed’s benchmark short-term interest rate remains around 4.3% after three rate cuts in 2024. Powell indicated last month that the central bank would likely wait until at least September before considering further reductions, wanting more data on whether tariffs would push inflation persistently higher.
However, Fed Governors Waller and Michelle Bowman, both Trump appointees, have suggested the tariffs may not spark lasting inflation and signaled they could support lowering rates as soon as the Fed’s July 29-30 meeting.
Despite the political crossfire, Powell is determined to avoid premature moves that could either reignite inflation or undermine economic stability. The coming months could prove pivotal in shaping the Fed’s next steps — and its increasingly fraught relationship with the White House.
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