UPDATE @ 2:04 p.m. ET:
The Federal Reserve will leave interest rates unchanged. The decision was announced this afternoon at the Fed’s monthly meeting.
All eyes are on the Federal Reserve this afternoon as markets await a pivotal interest rate decision.
With inflation cooling and economic data sending mixed signals, President Donald Trump has ramped up pressure on Fed Chair Jerome Powell to slash rates immediately — a move that would mark a significant pivot in monetary policy.
The Federal Open Market Committee (FOMC) is expected to release its policy statement at 2:00 p.m. ET, followed by a press conference from Powell at 2:30 p.m. ET. Most analysts forecast that the Fed will hold interest rates steady in the 5.25%–5.5% range, a 23-year high.
Trump: “The Fed Is Killing Growth”
President Trump has publicly and repeatedly criticized Powell in recent weeks, calling the Fed’s tight policy stance “an economic straitjacket” on U.S. workers and manufacturers. In a Tuesday interview, Trump told Fox Business:
“Inflation is falling, the dollar is strong, but the Fed is still acting like it’s 2022. Powell needs to start helping the American people instead of punishing them.”
The pressure comes as Trump heads into the general election cycle seeking to solidify economic momentum. His populist economic agenda, including steep tariffs and a push for reindustrialization, has collided with the Fed’s inflation-fighting strategy.
A Divided Fed
While the consensus is for a rate hold, internal tensions are mounting. According to Reuters, Fed Governors Michelle Bowman and Christopher Waller may formally dissent if the committee fails to signal rate cuts in the coming months — a rare move that would mark the first dual dissent in over three decades.
Key data driving the Fed’s hesitation:
- Core inflation remains just above 2.5%, slowing but not quite at target.
- Wage growth is stabilizing, but labor costs remain elevated in service sectors.
- Consumer spending has softened slightly, particularly among lower-income households.
What Wall Street Expects
Markets have largely priced in no change to rates today, but the focus is on whether Powell’s remarks will hint at a cut in the Fed’s next meeting, set for September 17.
“We’re not expecting fireworks from the statement,” said Kathy Bostjancic, chief economist at Nationwide. “But Powell’s tone could trigger a rally — or a sell-off — depending on how dovish or hawkish he sounds.”
Fed Watch: Market Sentiment (as of 1:20 p.m. ET)
| Market Index | Status | Daily Change |
|---|---|---|
| S&P 500 | Flat | -0.1% |
| Nasdaq Composite | Slightly Higher | +0.2% |
| 10-Year Treasury Yield | 4.27% | Steady |
| Fed Funds Futures (Sept) | 75% hold, 25% cut | — |
Tariffs, Trade & Monetary Tug-of-War
Trump’s aggressive trade stance — including new tariffs on Chinese electronics, German autos, and Latin American steel — has added fresh inflationary pressures that complicate the Fed’s path. Economists say the central bank now faces “policy crosswinds”:
- Tariffs are likely to push prices up, especially for durable goods and construction materials.
- Rate cuts could ease borrowing costs, but risk stoking inflation again.
“This is a delicate moment for the Fed,” said Sarah House, senior economist at Wells Fargo. “They’re trying not to overreact to political pressure or transient price shocks.”
What’s Next?
While today’s decision may offer few surprises, the press conference could be Powell’s most closely watched to date. If he signals even the slightest opening to cuts this fall, it could reshape not only financial markets but the political narrative heading into November.
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