Fed holds rates steady, resists Trump’s jabs, signals cautious path for cuts

As widely expected, the Federal Reserve kept its benchmark interest rates unchanged in the 4.25%–4.50% range, resisting political pressure from President Donald Trump, who during the central bank’s meeting called Fed Chair Jerome Powell a “fool”.

While leaving borrowing costs untouched, the Fed reaffirmed its guidance for a total of 50 basis points of rate cuts this year, implying two quarter-point reductions. However, uncertainty has grown since March: seven policymakers now forecast no cuts at all this year (up from four in March), two expect just one cut, and eight still see room for two cuts (down from nine).

“The economy is in a strong position,” Powell said, emphasizing the Fed’s commitment to its dual mandate of price stability and maximum employment. He noted that the impact of “changes in trade and fiscal policies remains uncertain,” and that monetary policy is “well positioned” to wait for more data before taking further action.

Appearing unruffled by Trump’s personal attacks, Powell made no reference to them during the press conference. Meanwhile, Trump mocked the Fed chair online, asking rhetorically: “Can I appoint myself to the Fed? I’d definitely do a better job.”

“The FOMC meeting struck a dovish tone, with the dot plot still pointing to two cuts this year despite upward revisions to short-term inflation forecasts,” said Simon Dangoor, head of Fixed Income Macro Strategies at Goldman Sachs Asset Management. “Implicitly, FOMC members still expect the current inflation uptick to be largely transitory and remain reluctant to tolerate higher unemployment. We expect rates to stay unchanged at the next meeting but see scope for the easing cycle to resume later this year if the labor market softens.”

Robert Lind, economist at Capital Group, added: “The Fed’s decision highlights the delicate balance it faces amid persistent inflation, slowing US growth and rising political uncertainty.

While tariffs and geopolitical tensions have weighed on sentiment and activity, we believe this is a time to stay focused on long-term fundamentals. History shows markets can adapt and recover even in the face of significant shocks. Against this backdrop, we continue to adopt a measured approach, favoring time in the market over market timing, and remain anchored in disciplined, bottom-up analysis to navigate volatility and identify lasting opportunities.”