The Federal Reserve kept its key interest rate unchanged, signaling a cautious approach amid steady economic growth and persistent inflation. The decision drew sharp criticism from former U.S. President Donald Trump, who labeled Fed Chair Jerome Powell as “stupid” for not lowering rates.
US Central Bank Holds Interest Rates; Emphasizes Stable Growth and Elevated Inflation
The Federal Reserve has decided to keep its policy rate unchanged at 4.25%–4.50%, maintaining its stance amid stable economic activity, a strong labor market, and slightly elevated inflation. The decision was announced shortly after former President Donald Trump criticized Federal Reserve Chair Jerome Powell, calling him “stupid” for not cutting interest rates.
In its official Federal Reserve policy statement, the Federal Open Market Committee (FOMC) noted:
“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”
The Fed reiterated its commitment to achieving maximum employment and maintaining a long-term inflation target of 2%. While the economic outlook has become more stable, the committee warned that risks remain and will be closely monitored through data-driven decision-making.
The quantitative tightening program will also continue, as the Fed proceeds with reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. Despite ongoing asset sell-offs, excess liquidity in the financial system has remained mostly unchanged in recent months.
The decision comes amid continued political pressure. In a social media post prior to the announcement, Trump lashed out at Powell, calling him “stupid” for maintaining current interest rates instead of implementing cuts.
The FOMC vote to hold rates steady was unanimous, with support from Chair Jerome H. Powell and all committee members, including Vice Chair John C. Williams and Governors Michelle W. Bowman, Susan M. Collins, Austan Goolsbee, and others.
The Fed reaffirmed its intention to remain flexible, stating it is “prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”