The federal reserve held stable interest rates on Wednesday, just a few weeks after President Donald Trump intensified calls for drop in loan costs and expressed his eagerness as to the potential “termination” of the president of the Fed, Jerome Powell.
In recent days, Trump has resumed his attacks on Powell, saying that he did not dismiss Powell before the end of the quarter of the first central banker next year. Trump, however, reiterated his dissatisfaction with the level of interest rate, urging the Central Bank to lower them.
Speaking at a press conference in Washington, DC on Wednesday, Powell said that the economy remained in “solid form”, but warned Trump’s pricing policy could cause higher inflation and economic slowdown.
“If the sharp increase in prices announced is sustained, they are probably raising an increase in inflation and a slowdown in economic growth,” Powell said on Wednesday.
“However, all of these policies are evolving and their effects on the economy remain very uncertain,” added Powell.
Asked about Trump’s call at lower rates, Powell has increased the president’s criticism.
“This does not affect our work at all,” said Powell. “We will always consider only economic data, perspectives, risk balance – and that’s it.”
This decision marked the second consecutive decision of the Fed to maintain the current level of interest rates, repeating an approach adopted in January. Before that, the Fed had reduced the rates to three consecutive meetings.
“For the moment, it seems to be a fairly clear decision for us to wait and see,” said Powell.
The Federal Open Market Committee (FOMC), an organization for developing the Fed policies, said on Wednesday that the main economic indicators had improved, but he warned increased economic uncertainty.
“The risks of higher unemployment and higher inflation have increased,” the FOMC said in a statement.
Last month, Powell raised the possibility that Trump’s prices can cause what economists call “stagflation”, that is to say when inflation increases and the economy slows down.
If the Fed increases interest rates as a means of protecting against inflation induced by prices in the context of such a scenario, this may suffocate the loan and the slowdown in the economy. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to stimulate spending and worsen inflation.
However, Powell highlighted a solid economic performance as a reason to adopt an approach to the patient while decision -makers await the impact of prices.
“For the moment, we are well placed to wait for greater clarity,” Powell told an audience of the Chicago Economic club.
Powell noted the possibility of a change in economic conditions, saying: “Life moves fairly quickly”.
The rate decision arrives a few days after new data has shown robust employment growth in April.
Despite the feeling of consumers and market disorders, the labor market has provided a positive point since Trump took office. Meanwhile, inflation was cooled in March, the last month for which data is available.
Despite this, the fears of recession go up to Wall Street while Trump’s prices threaten to upset the world trade. Goldman Sachs earlier this month made a recession close of 35% to 45%. JPMorgan has set the probability of a recession this year at 60%.
A government report last week has shown that the US economy has decreased in the first three months of 2025, a large part of which took place when the Rafale of Trump’s pricing proposals uncertain uncertainty among companies and consumers.
The president of the federal reserve, Jerome Powell, speaks to the Economic Club in Chicago, on April 16, 2025, in Chicago, Illinois.
Kamil Krzaczynski / AFP via Getty Images
The American gross domestic product, or GDP, decreased at an annualized rate of 0.3% over three months ending in March, according to government data published on Wednesday. The figure has marked a net drop of 2.4% growth in the last three months of 2024.
On Wednesday, the rate decision also marks the first adjustment of loan costs since the announcement of the closely watched “release day” of Trump on April 2, which triggered the greatest drop in the stock market for a day since the Pandemic COVID-19.
A few days later, Trump suspended a large band of prices, sending the market to one of its one day ever more important. A simultaneous climbing of prices on Chinese products has maintained the effective rate rate at its highest level for more than a century, the Yale budget lab find.
The White House seeks to conclude trade agreements with dozens of American trade partners before the 90-day suspension of the so-called “reciprocal prices” in July.
“While we understand a better understanding of policy changes, we will have a better idea of the implications for the economy,” said Powell last month.
