Fed expected to hold interest rates steady, resisting Trump’s pressure

The Federal Reserve on Wednesday is set to announce its latest decision on interest rates, just days after President Donald Trump made an unusual visit to the central bank calling for a rate cut.

The central bank has defied Trump’s public criticism for months. The Fed has held interest rates steady for seven consecutive months, taking a wait-and-see approach as it voices concern about a possible burst of inflation as a result of Trump’s tariff policy.

Investors peg the chances of interest rates holding steady on Wednesday at an overwhelming 97%, according to the CME FedWatch Tool, a measure of market sentiment.

Trump has repeatedly urged the central bank to lower interest rates, saying the policy would boost economic performance and reduce interest payments on government debt.

“We have a man who just refuses to lower the Fed rate,” Trump said of Powell last month. “Maybe I should go to the Fed. Am I allowed to appoint myself? I’d do a much better job than these people.”

The Fed is an independent agency established by Congress. Trump is legally barred from appointing himself the head of the central bank.

In recent weeks, Trump has also slammed Powell citing cost overruns tied to the central bank’s $2.5 billion building renovation project.

The Fed attributes spending overruns to unforeseen cost increases, saying that its building renovation will ultimately “reduce costs over time by allowing the Board to consolidate most of its operations,” according to the central bank’s website.

Federal law allows the president to remove the Fed chair for “cause” — though no president has ever done so. Powell’s term as chair is set to expire in May 2026.

The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, a lowering of interest rates could help stimulate economic activity and boost employment, especially while inflation remains modest.

The central bank, however, issued a forecast last month indicating some concern about a rekindling of inflation due to elevated tariffs. Importers typically pass along a share of the higher tax burden in the form of price hikes.

Tariffs contributed modestly to the rise of inflation in June, though overall price increases owed largely to a rise in housing and food products with little connection to tariffs, analysts previously told ABC News.

Despite its patient approach, the Fed last month forecast two quarter-point interest-rate cuts over the remainder of 2025, carrying over a prediction issued in March.

The federal funds rate stands between 4.25% and 4.5%, preserving much of a sharp increase imposed in response to a pandemic-era bout of inflation.

Earlier this month, Powell said he would not rule out a potential interest rate cut as soon as the July meeting.

“I wouldn’t take any meeting off the table or put any on the table,” Powell told the panel at the European Central Bank forum in Sinatra, Portugal. “It depends on how the data evolve.”