The United States Federal Reserve is keeping interest rates unchanged, even as President Donald Trump urges faster rate cuts. Since December, the Fed has held rates between 4.25% and 4.50%. Officials say they are watching the economy closely before making new moves.
Trump returned to office earlier this year and quickly reintroduced tariffs on many trade partners. A 10% tariff now applies to most of America’s imports. More increases are expected in July unless a pause is extended. Trump has also restarted a trade dispute with China and added taxes on steel, aluminum, and cars. These actions have affected financial markets and shaken consumer confidence.
Economists say it could take several months before the full impact of these tariffs shows up in store prices. For now, small businesses are feeling the pressure. Many are seeing lower profits because they are absorbing the extra costs instead of raising prices for buyers.
The job market is showing mixed signs. Hiring has slowed a bit, and fewer people are in the labor force. Still, the unemployment rate has stayed the same. Inflation also remains low, even with tariff-related changes. The Federal Reserve is reviewing all these signals as it considers its next steps.
President Trump has publicly criticized Fed Chair Jerome Powell. He wants the Fed to lower interest rates by one full percentage point. Trump says this would help reduce interest costs on national debt. He also claims the Fed could raise rates again if inflation picks up later. However, Powell has made it clear that the Fed will follow data, not politics.
The Federal Reserve ended a two-day meeting this week. Now, analysts are looking at its updated forecasts for growth, jobs, and inflation. Many expect two rate cuts before the end of 2025, starting in September. But that depends on how the economy reacts to current trade policies.
Some experts believe the Fed is trying to stay quiet while watching key economic signals. They say officials are waiting to see how inflation, hiring, and consumer spending change over the summer. During the pandemic, stimulus payments helped people keep spending. But now there is no such support, and demand could fall if prices rise too quickly.
Weak job data might lead to more rate cuts. But if inflation grows too fast, the Fed could hold back. For now, central bank officials are not rushing. They are trying to avoid making decisions based on short-term pressure.
If the trade war had not resumed, economists say the Fed might have already cut rates. But the current mix of tariffs, political pressure, and uncertain data is making things more complex. The Fed is focusing on long-term economic health.
