Trump Turns Up the Heat, but the Fed Holds Firm For Now

The U.S. Federal Reserve is set to hold interest rates steady this week, brushing off mounting pressure from President Donald Trump and his top advisers who are calling for aggressive rate cuts to spur the economy.

Despite a flurry of public criticism, including Trump briefly suggesting he could fire Fed Chair Jerome Powell, a claim he later walked back, the central bank is expected to keep its benchmark interest rate at 4.25% to 4.50% when it announces its decision on Wednesday.

Trump’s argument? Inflation is cooling, and high borrowing costs are no longer necessary. He and Treasury Secretary Scott Bessent insist the Fed’s post-pandemic rate hikes are choking growth and holding back economic recovery.

“We’ve beaten inflation,” Trump said during a recent campaign stop. “Now it’s time for the Fed to stop punishing American businesses and families.”

But Fed officials remain cautious. While inflation has eased from its 2022–2023 highs, it still lingers above the Fed’s 2% target. The economy posted a modest contraction last quarter, yet consumer spending and job creation remain surprisingly resilient, raising fears that cutting too soon could reignite price pressures.