The US Federal Reserve on Wednesday (July 30) held its key short-term interest rate steady for the fifth time this year, disregarding ongoing pressure from US President Donald Trump to lower rates.The Federal Reserve kept its key short-term interest rate unchanged at around 4.3%, maintaining the level set after three rate cuts last year. Chair Jerome Powell noted that the Fed might have already lowered rates further if not for the broad tariffs imposed by President Trump.
Powell and other Fed officials say they want to see how Trump’s duties on imports will impact inflation and the broader economy. So far, the duties have lifted costs of some goods, such as appliances, furniture, and toys, and overall inflation has risen a bit, though less than many economists had expected.
Also Read: What Trump’s 25% tariff could mean for India’s GDPThere were some signs of splits in the Fed’s ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while 9 officials, including Powell, favoured standing pat. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn’t vote.
Powell and other Fed officials say they want to see how Trump’s duties on imports will impact inflation and the broader economy. So far, the duties have lifted costs of some goods, such as appliances, furniture, and toys, and overall inflation has risen a bit, though less than many economists had expected.
Also Read: What Trump’s 25% tariff could mean for India’s GDPThere were some signs of splits in the Fed’s ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while 9 officials, including Powell, favoured standing pat. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn’t vote.
The choice to hold off on a rate cut will almost certainly result in further conflict between the Fed and the White House, as Trump has repeatedly demanded that the central bank reduce borrowing costs as part of his effort to assert control over one of the few remaining independent federal agencies.
Also Read: Trump 25% Tariff On India: Six textile stocks and their exposure to the US
