The U.S. Federal Reserve held interest rates stable on Wednesday, resisting political pressure from President Donald Trump, although new economic data showed stronger than expected headlines.
The Federal Open Market Committee (FOMC) voted to keep its benchmark rate in the range of 4.25% to 4.5%, which is the level it has maintained since December. Despite widespread expectations, the decision sparked an immediate fire from Trump, who earlier urged central banks to cut borrowing fees after an annual GDP rebounded by 3% in the second quarter.
Trump posted his favorite nickname on social media, Jerome Powell, nickname: “Better than expected!’ Too late!
The Fed’s post-meeting statement reiterated its approach to data dependence and noted that it would adjust monetary policy if necessary to “hinder the Commission’s goals.” It acknowledges that moderating growth, sustained inflation issues and global development are key opinions on future decision-making.
Although the title GDP figures appear strong, analysts are quick to point out that most of the earnings are due to a sharp drop in imports, which flattered the total. In contrast, measures of consumer spending and business investment have slowed significantly. The size of the separate business sector at core domestic demand has dropped from 1.9% to 1.2%, raising concerns that the economy has lost power under the ground.
“Below the highest figure, the economy is turning to lower equipment, but not inverse,” said Bernard Yaros, an American economist at Oxford Economics. “The Fed can afford it and see how tariffs work before moving.”
Despite this, cracks began to appear in the Federal Reserve’s consensus. Two members of the FOMC have opposed for the first time since 1993, favoring a 0.25 percentage point cut, suggesting that internal relief pressure is increasing.
Nigel Green, CEO of financial consulting firm Devere Group, said the expected pause is expected, but is likely to be a prelude to the tax cut in September.
“The Fed is likely to have bought it for eight more weeks just before the pivot,” Green said. “The case of cutting is not based on fear, it is based on realism. Growth is not reversing, but it is thinning.”
He noted that while the GDP figures seem impressive, it is driven primarily by trade distortions rather than based on widespread expansion. He added that consumer behavior began to shift.
“We’re seeing the transition. People aren’t panic, but they’re hesitant. They think the way they are where and how they spend,” Green said. “Smart investors will adjust as early as possible.”
The Fed’s decision to stabilize also emerged, as inflation outlined for the second straight month in June, exacerbating bank caution. Nevertheless, the Fed appears to be getting closer to policy shifts as the inflation trends soften overall and global growth eases.
Fortune Club investment manager Isaac Stell said the Fed is balancing strong data and signs of slowdown.
“The fifth consecutive federal meeting remained stable in a close second with more than expected GDP,” Stell said. “But the fact that the two governors broke in was important. It marked a heated up internal debate.”
Despite Trump lobbying in public lobbying, Powell insists on the Fed’s independent mandate, resisting calls for immediate currencies to be alleviated. Bets are rising as the presidential election is approaching and trade tensions are under pressure.
As central banks in the UK, Canada and Europe have begun to reduce inflation reduction rates, the Fed’s next move is under increasing scrutiny. Now, many analysts expect the U.S. tax cuts to arrive in September for the first time, especially as incoming data continues to show weak domestic demand and cautious consumer behavior.
At present, the Fed is still in a waiting mode, but the waiting may not last longer.
