The Federal Reserve keeps interest rates steady amid pressure from Trump

WashingtonThe Federal Reserve (Fed, the United States central bank) is once again defying Donald Trump and keeping interest rates unchanged at 4.25% and 4.5%, despite pressure from the US president, who has threatened to demand a cut since taking office. The central bank has also updated its projections for the country's economy, now predicting only a 0.5 percentage point cut in interest rates by the end of the year, through two 0.25 percentage point cuts, the dates for which have yet to be set. The decision is justified by a forecast for the United States of lower economic growth, higher unemployment and higher inflation for the remainder of 2025.

In line with its May statement, the Fed has highlighted that "recent indicators suggest that economic activity has continued to expand at a solid pace," despite the "tariff measures pushed by Trump, to which the Fed does not directly refer. Although "uncertainty about the economic outlook has diminished, it remains elevated," so future decisions on whether to implement both cuts will depend on the evolution of the data.

To the tariff war, whose end remains to be seen, we must now also add the escalation of tensions in the Middle East. The exchange of bombings between Iran and Israel further clouds the outlook, as it has caused an increase in the price of oil, which will end up affecting the price of many products and, therefore, the cost of living for families. In addition, Trump continues to meditate on how intervene, without having ruled out direct US intervention in the conflict to support Israel. In fact, Fed Chairman Jerome Powell described international uncertainty as "unusually high" and warned in a press conference that there could be a rise in inflation in the country, albeit with a "short-lived" effect.

Trump once again attacks Powell

Trump has long urged Powell to cut rates because a rate cut makes credit cheaper, which stimulates business investment and household consumption, allowing him to borrow less. However, the Fed chairman resists because a rate cut also increases the risk of inflation. Just this Wednesday, Trump once again attacked Powell. "We have a stupid person, frankly, a member of the Federal Reserve who probably won't cut rates," he said from the White House during the installation of two new flags. "I don't know if he's a politician. He's not a smart person, but it's costing the country a fortune. So he has to go in a few months. He has to go. Fortunately, he will be removed," he insisted.

This isn't the first time the Republican has said Powell has no idea about economics or threatened to fire him. Rates They have remained between 4.25% and 4.5% since the January meeting, when the Fed broke the cycle of downgrades that began last September.