Jerome Powell’s Federal Reserve holds rates steady despite immense pressure from Trump to cut, cut, cut

Economy·Federal ReserveJerome Powell’s Federal Reserve holds rates steady despite immense pressure from Trump to cut, cut, cutBy Marco Quiroz-GutierrezBy Marco Quiroz-GutierrezReporterMarco Quiroz-GutierrezReporterRole: ReporterMarco Quiroz-Gutierrez is a reporter for Fortune covering general news.SEE FULL BIO U.S

The Fed’s decision could be felt by President Trump as a rebuke after Trump continuously called for the Fed and Chairman Jerome Powell to cut rates

The Federal Reserve maintained rates on Wednesday, holding up against the pressure of President Donald Trump and his recently escalated rhetoric

The Fed, while it brought down rates several times last fall, has stayed the course ing the past four Federal Open Market Committee meetings

In its decision, the Fed cited low unemployment and a solid labor market in its decision to hold rates steady

Wednesday’s decision included two dissenting votes from the majority, Fed governors MichelleBowman and Christopher Waller

It is the first time in more than 30 years that two governors have dissented in a single meeting

In Fed Chairman Jerome Powell’s prepared remarks Wednesday, he said the federal funds rate was “moderately restrictive,” and said the Fed needs more data on the effects of tariffs before moving to a more neutral rate The U.S. economy has maintained some resilience despite analyst warnings impending financial turmoil partly caused by Trump’s tariffs

This combination of stable unemployment and a return to GDP growth ly played into the Fed’s preference for keeping rates unchanged, despite recent skepticism over data published by the Bureau of Labor Statistics, said Luke Tilley, a former Philadelphia fed adviser and chief economist at Wilmington Trust. “When they see the unemployment rate remaining low, when GDP has bounced back to a positive, when they don’t see any imminent blems, then they’re really reluctant to start cutting, or even say that they’re going to be cutting, because it’s much harder to unring that bell once they say it and are of off to the races,” Tilley told Fortune

At the same time, the most recent GDP number shows weakness when stripped down to the core components of consumer spending and investment, Van Hesser, chief strategist at the Kroll Bond Rating Agency, told Fortune

Powell said Wednesday that the Fed is committed to making sure the recent inflation uptick becomes permanent. “A reasonable base case is that these are one time price effects

Of course, in the end, there will not be, this, will not turn out to be inflation, because we’ll make sure that it’s not

We will, through our tools, make sure that this does not move from being a one time price increase to serious inflation,” he said

While concerns unemployment have been at the forefront for the Fed in recent months, potential signs of lagging growth are bringing more equilibrium than before to the Fed’s dual mandate, said Hesser

Trump’s tariff policies are ly to weigh on consumers and es in the second half of the year, and the Fed is ly waiting for more data to assess these effects

Still, Hesser said despite Wednesday’s rate cuts, he believes the Fed will cut rates later in the year, possibly at its last meeting of the year in December. “I would expect to hear some ary today acknowledging that the risks of inflation and the risks of to the labor market, which is really growth, are coming into better balance, and so it kind of sets up for what we’ve expected, which is, fourth quarter rate cuts—two cuts of 50 basis points,” he said

As the Trump administration continues to negotiate trade deals with its allies, including, most recently, with the EU, the threat of tariffs and their effects on inflation has worried market onlookers

On Wednesday, Trump said he would impose a 25% tariff on imports from India because of the country’s high tariffs on U.S. goods

Trump also claimed India buys much of its military equipment and energy from Russia, which warranted an unspecified “penalty.” During Powell’s press conference Wednesday, the Fed Chairman downplayed the recent deals struck by the Trump administration with its trading partners. “We are learning more and more

It doesn’t feel we’re very close to the end of that cess

And that’s that’s not for us to judge, but it does it feels there’s much more to come,” he said

Since before he was elected President in November, Trump has continuously criticized Powell and the Fed for not dropping interest rates as fast as he would

Trump has ramped up his rhetoric recently by repeatedly wishing for Powell to resign and insulting him as “Mr

Late” and “one of my worst appointees,” among others

The president has also seized upon a previously scheduled remodel of the Federal Reserve’s headquarters in Washington D.C. to publicly shame Powell and hint at his possible dismissal

Powell said Wednesday the President’s visit to the Fed last week was “very constructive” despite Trump’s scaled up rhetoric. “I was quite pleased to have the President say multiple times that what he really wanted to see was was us getting this construction as soon as possible

That is our focus,” he said

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