Heading towards a confrontation with Trump: Federal Reserve maintains the unchanged key interest rate - Headed for a clash with Trump: Fed remains unmoved on interest rate adjustments
Headline: Trump vs. Federal Reserve: A Tense Standoff Over Interest Rates
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In a dramatic face-off, the US Federal Reserve has kept its key interest rate steady, igniting a potential confrontation with former President Donald Trump. The nation's central bank holds rates between 4.25 to 4.5 percent, marking a ), while Trump has been vocal about his desire for lower borrowing costs to boost economic growth.
Trump mistakenly thinks he knows more about interest rates than Powell. Controversially, Trump has repeatedly criticized Fed Chair Jerome Powell and stated in recent weeks, "I believe I understand interest rates better than he does." Despite the Fed's independence from the US government, Trump has attempted to exert influence on monetary policy.
Trump's aggressive trade policies, which were a significant driver of inflation during his term, loom large in the Fed's decision. Uncertainty over the lasting impact of these policies is a major concern, causing inflation to ease in recent months. In March 2025, US consumer prices rose 2.4 percent year-over-year compared to 2.8 percent in February, but concerns persist about the long-term implications.
The Fed's primary responsibility is to control inflation, striving for 2 percent annual growth. High interest rates help counterbalance soaring consumer prices by limiting credit availability, potentially reducing price increases. In September 2022, the Fed started phasing out accommodative policies with a 0.5 percentage point interest rate cut. Two additional rate reductions followed in November and December, but rates have remained unchanged since. On average, the Fed anticipates the key interest rate to fall to 3.9 percent in 2025, indicating possible interest rate reductions this year.
Despite Trump's insistence on lower interest rates to stimulate the economy, the Fed finds itself in a difficult position. The Fed must carefully weigh the potential benefits of easing monetary policy against the risks of increasing inflation and undermining economic stability.
Donald Trump US Federal Reserve Interest Rate Inflation Political Pressure Jerome Powell Economic Growth
- The collision course between the President of the United States, Donald Trump, and the Federal Reserve, particularly its Chair, Jerome Powell, centers on interest rates, a key factor in the economic recovery of the United States.
- The Republican former President, Trump, has often expressed his belief that he understands interest rates better than many finance and business experts, including the head of the central bank, Jerome Powell, a stance that has sparked debate in the realm of general-news and politics.
