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The US Federal Reserve has refused to cut its key interest rate for the second time in a row, despite constant public pressure from President Donald Trump. This was reported by Reuters and Business Insider.
As analysts had expected, the Fed on Wednesday decided to leave the rate unchanged for the fourth time this year. The reason for this was the rise in inflationary risks caused by the inconsistent trade policy of the White House, which, according to Fed Chairman Jerome Powell, could hit US businesses and consumers.
During the briefing, Powell stressed that “the level of uncertainty in the US is unusually high right now”, but the Fed is “focused on maintaining maximum employment and price stability”.
Inflation expectations are rising
In May, annual inflation in the United States rose to 2.4% (from 2.3% in April), exceeding the Fed’s 2% target. According to the Fed’s forecasts, inflation and unemployment will remain higher than expected in March, and the economic growth forecast has been revised downwards.
“We expect inflation to rise significantly in the coming months. Someone has to pay for the new duties,” Powell said.
Trump steps up attacks on Fed and Powell
In response, Trump once again criticised the Fed chairman on Truth Social: “It’s too late – Powell is the worst, a real fool who is costing America billions.”
Trump has repeatedly demanded that Powell immediately cut rates to stimulate lending and economic growth, although this could lead to a new inflationary surge.
In April, following Trump’s statements, stock indices fell, gold hit a historic record of $3,500 per ounce, and the US dollar sank amid growing demand for safe-haven assets.
Why the Fed is ignoring Trump’s pressure
Despite the pressure, the US president does not have the constitutional authority to dismiss the Fed chairman, a position that guarantees independence in monetary policy decision-making.
Powell, who was appointed by Trump in 2018, became a target of criticism from the president after the Fed started raising rates. Trump even called Powell an “enemy of the people”.
A new Fed chairman can only be appointed in 2026, when Powell’s term ends.
