Jerome Powell’s Federal Reserve is stable despite heavy pressure from Trump

The Fed has cut interest rates Several times last fallmaintained the course following the past four Federal Open Market Committee meetings. On Wednesday, the Fed did the same, falling from its peak in the last two years but held interest rates between 4.25% and 4.5%, higher than the pre-Covid level, between 1.5% and 1.75%. In that decision, the Fed Quote The declining unemployment rate and a solid labor market are solid labor markets in the decision to hold stable interest rates.

Wednesday’s decision included two votes against the majority, Fed Gov. Michelle
Bowman and Christopher Waller. It is the first time in more than 30 years that two governors have opposed at a single meeting.

The US economy remains resilient to some extent Analyst warning About the imminent financial disruption caused in part by Trump’s tariffs. The unemployment rate fell slightly to 4.1% in June, and has remained essentially stable for the past 12 months. Meanwhile, GDP growth in the second quarter of the year rose 3%, bounced back from a 0.5% contraction in the first quarter.

This combination of stable unemployment and a return to GDP growth is likely to correspond to the Fed’s preferences, despite not changing prices Recent skepticism Regarding data issued by the Bureau of Labor Statistics, Luke Tilly, a former Philadelphia Fed Advisor and Chief Economist for the Wilmington Trust, said.

“When we see the unemployment rate as still low and when GDP returns positively and we don’t see any immediate issues, they are really reluctant to start a cut. luck.

At the same time, the latest GDP numbers show weakness when stripped down into the core components of consumer spending and business investment, said Van Hesser, chief strategist at Kroll Bond Rating Agency. luck. Core inflation, which excludes volatile food and energy prices, also rose to 2.9% in June, up from 2.8% in the previous month.

While concerns about unemployment have been at the Fed’s frontline in the past few months, potential signs of lagging growth have led to more equilibrium than before in the Fed’s dual mission, Hesser said.

Trump’s customs policy is likely to put pressure on consumers and businesses later in the year, and the Fed is likely to be waiting for more data to assess these effects. Still, Hesser said despite interest rate cuts on Wednesday, the Fed expects to cut prices later this year, perhaps at its final meeting in December.

“Today, we acknowledge that inflation risks and labor market risks are truly growing, and we are hoping to hear some commentary.

As the Trump administration continues to negotiate trade contracts with allies, including the EU, the threat of tariffs and inflation impacts are worrying market spectators. On Wednesday, Trump said he would impose it. 25% tariff on imports from India Due to the high national tariffs on US goods. Trump also claimed that India purchased much of its military equipment and energy from Russia, ensuring an unspecified “penalty.”

Even before he was elected president in November, Trump has been continuing to criticize Powell and the Fed for not lowering interest rates as quickly as he hoped. Trump recently reinforced his rhetoric by repeatedly hoping Powell to step down and scorn him, particularly as “one of my worst appointees.” The president also has Seized in a previously scheduled remodel Publicly embarrassing Powell, at the Federal Reserve headquarters in Washington, D.C., suggesting his potential termination.