WASHINGTON– The U.S. Federal Reserve left its benchmark interest rate unchanged at 4.25% to 4.5% on Wednesday, resisting mounting pressure from the Trump administration to ease monetary policy.
“Although swings in net exports continue to affect the data, recent indicators suggest that the growth of economic activity moderated in the first half of the year,” the Federal Open Market Committee (FOMC) said in a statement. “The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”
The FOMC emphasized ongoing uncertainty in the economic outlook but reaffirmed its commitment to “supporting maximum employment and returning inflation to its 2% objective.”
According to the U.S. Commerce Department, the economy grew at an annualized rate of 3% in Q2, rebounding from a 0.5% contraction in Q1. Meanwhile, the consumer price index rose 2.7% in June year-over-year — the largest increase since February, attributed in part to tariff-driven inflation.
Despite President Donald Trump’s repeated calls for a rate cut, the Fed remained cautious. “It seems to me, and to almost the whole committee, that the economy is not performing as though restrictive policy is holding it back inappropriately,” said Fed Chair Jerome Powell during a press conference. “Modestly restrictive policy seems appropriate.”
While two of the 12 FOMC voting members favored a 25 basis point cut, another member abstained from voting. The Fed has not decided whether to cut rates at its next meeting in September.
Powell acknowledged that tariffs are beginning to impact the prices of some goods but noted the broader economic effects remain unclear.
He also rejected the idea that the Fed should consider the government’s fiscal needs when setting interest rates. “No advanced economy’s central bank does that,” he said. “If we did, it wouldn’t be good — neither for our credibility nor for the credibility of U.S. fiscal policy.”
President Trump, undeterred, again urged Powell to lower rates, citing stronger-than-expected GDP data. “No Inflation! Let people buy and refinance their homes!” he wrote on social media. (Source: IANS)
