The Federal Reserve said on Wednesday that it’s keeping its benchmark interest rate steady, citing elevated uncertainty over the nation’s economic outlook. The announcement comes just days after President Trump made a visit to the central bank, calling for a rate cut. The decision keeps the Fed’s benchmark short-term rate at a range of 4.25% to 4.5% for a fifth straight meeting.
The Federal Open Market Committee, the 12-person central bank’s rate-setting panel, said in its statement: “Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”
The 9-2 vote saw two FOMC members, Fed Governors Michelle Bowman and Christopher Waller, voted in favor of lowering the central bank’s short-term rate; marking the first time since 1993 that two member of the Fed’s Board of Governors have voted against the chair.
Speaking at a press conference in Washington, D.C., Fed Chair Jerome Powell said on Wednesday that. he advocated for the independence of the Federal Reserve. Powell said that “political independence gives central bankers the ability to make these very challenging decisions in ways that are focused on the data, the evolving outlook, the balance of risks – and not on political factors. If you were not to have that, there’d be a great temptation of course to use interest rates to affect elections, for example. I think it’s very important.”
Powell added that tariffs had begun to contribute to price increases for some goods but the ultimate impact of the policy remains uncertain: “Higher tariffs have begun to show through more clearly into prices of some goods but their overall effects on inflation and the economy remain to be seen. Their effects on inflation could prove to be short-lived, but it is possible the inflation effects could be more persistent. We’ll do what we need to do to keep inflation under control.”
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