Central bank leaves rates unchanged while Trump blasts 'stupid' Fed chair
The Federal Reserve said it was leaving interest rates unchanged after its June meeting, remaining in wait-and-see mode on the economic outlook despite pressure from President Trump to bring borrowing costs lower.
The central bank held its benchmark rate steady in its current range of 4.25% to 4.50% Wednesday, just hours after Trump blasted Powell as a “stupid person” and suggested the Fed chair was playing politics with interest rates by not cutting.
The decision came as no surprise to markets, which largely expect the Fed to leave rates where they are over the summer before a potential cut in September or October.
Fed decisionmakers are weighing the threat to the economy posed by the Trump administration’s tariff war, which has seen huge levies imposed on US trading partners, as well as the risk of an inflationary spike and the ongoing chaos in the Middle East.
But Trump, who said Wednesday morning he didn’t expect the Fed to cut, described Powell as a “political guy” who was “costing the country a fortune” by leaving rates where they are.
The effects of Trump’s global trade war, which began at the start of April on what the president described as “Liberation Day”, have yet to filter through the US economy.
Inflation ticked slightly higher in April compared with the previous month, the Bureau of Labor Statistics said last week, and increased by 2.4% over the same time last year.
Still, many observers believe it’s only a matter of time before the economic outlook worsens, with JPMorgan Chase chief executive officer Jamie Dimon warning last week that real economic numbers could “deteriorate” soon.
Trump dismisses inflationary fears, suggests he would do better job as Fed chair
Trump’s Wednesday attack on the Fed marks the latest in a salvo of recent calls by his administration for the central bank to lower rates.
Vice president JD Vance added his voice to that clamor last week, accusing the Fed of “monetary malpractice” for keeping rates unchanged despite steady inflation numbers.
But Powell and the Fed have remained steadfast in their view that more time is needed to assess the impact of the trade war on the economy before rate cuts can begin.
“If he’s worried about inflation, that’s OK. I understand that. I don’t think there’s going to be any. So far there hasn’t,” Trump said Wednesday, also suggesting that he would do a better job than the Fed in deciding monetary policy.
While Trump and Powell recently met at the White House – and Trump appointed Powell as Fed chair during his first presidency in 2018 – the pair have had an uneasy relationship, marked by frequent demands by Trump that rates come down.
Lawrence Yun, chief economist at National Association of Realtors (NAR), believes the Federal Reserve is too focused on tariffs and not enough on other disinflationary factors. He urges the Fed to widen its view for earlier rate cuts. https://t.co/IcIyoRhjqA
— Mortgage Professional America Magazine (@MPAMagazineUS) June 17, 2025
Last month, the Supreme Court signaled its support for the Fed’s autonomy, describing the central bank as a “uniquely structured institution with historical and constitutional characteristics that distinguish it from other administrative bodies.”
A rare public statement by the Fed followed Trump’s meeting with Powell, reinforcing its view that its approach to rates would depend on “incoming economic information and what that means for the outlook.”
Still, its latest decision to keep rates unchanged will likely further inflame tensions with the Trump administration. Powell’s term as chair is set to end in May 2026, and Trump has indicated that he’ll soon announce a successor.
The Fed’s next meeting on interest rates is scheduled to take place on July 29-30.
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