{"id":11637,"date":"2025-06-18T09:21:41","date_gmt":"2025-06-18T09:21:41","guid":{"rendered":"https:\/\/firearmman.com\/?p=11637"},"modified":"2025-06-18T09:21:43","modified_gmt":"2025-06-18T09:21:43","slug":"fed-expected-to-hold-interest-rates-steady-defying-trump","status":"publish","type":"post","link":"https:\/\/firearmman.com\/?p=11637","title":{"rendered":"Fed expected to hold interest rates steady, defying Trump"},"content":{"rendered":"
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The Federal Reserve on Wednesday will issue a new decision on the level of its benchmark interest rate<\/a>, testing a wait-and-see approach adopted by the central bank in recent months as it observes potential effects of President Donald Trump’s tariff<\/a> policy.<\/p>\n

The posture of restraint at the Fed has elicited sharp and repeated criticism<\/a> from Trump, who instead wants the central bank to cut interest rates in an effort to supercharge the U.S. economy.<\/p>\n

The Fed, an independent federal agency, is widely expected to continue its defiance of Trump.<\/p>\n

Investors peg the chances of a decision to leave rates unchanged at 99.9%, according to the CME FedWatch Tool<\/a>, a measure of market sentiment.<\/p>\n

Since Trump took office, inflation has eased and job growth has slowed.<\/p>\n

Fresh inflation data last week showed<\/a> a slight acceleration of price increases, but inflation remains near its lowest level since 2021. Hiring slowed<\/a> but remained sturdy in May as the uncertainty surrounding on-again, off-again tariffs appeared to curtail hiring less than some economists feared, a government report this month showed.<\/p>\n

The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, a lowering of interest rates could help stimulate economic activity and boost employment, especially while inflation remains low.<\/p>\n

Last week, Trump celebrated the fresh inflation data, deriding Fed Chair Jerome Powell in a social media post as a “numbskull” over his apparent unwillingness to cut interest rates. Since Trump took office, Powell has reaffirmed the independence of the Fed.<\/p>\n

Powell, in recent months, has warned about the possibility that tariffs may cause what economists call “stagflation<\/a>,” which is when inflation rises and the economy slows.<\/p>\n

Stagflation could put the central bank in a difficult position. If the Fed raises interest rates as a means of protecting against tariff-induced inflation under such a scenario, it risks stifling borrowing and slowing the economy further.<\/p>\n

On the other hand, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and worsen inflation.<\/p>\n

In recent weeks, Trump has dialed back some of his steepest tariffs, easing the costs imposed upon importers. Such companies typically pass along a share of the higher tax burden in the form of price hikes.<\/p>\n

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Federal Reserve Chair Jerome Powell delivers remarks during the Division of International Finance 75th Anniversary Conference, June 2, 2025, in Washington, D.C.<\/span><\/span><\/span><\/p>\n

Chip Somodevilla\/Getty Images<\/span><\/p>\n<\/div>\n<\/figcaption><\/figure>\n<\/div>\n<\/div>\n<\/div>\n

A trade agreement<\/a> between the U.S. and China<\/a> slashed tit-for-tat tariffs between the world’s two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened<\/a> their forecasts of a downturn.<\/p>\n

The U.S.-China accord came weeks after the White House paused a large swath of Trump’s “Liberation Day” tariffs targeting dozens of countries. Trump also eased sector-specific tariffs targeting autos and rolled back duties on some goods from Mexico and Canada.<\/p>\n

Still, an across-the-board 10% tariff applies to nearly all imports, except for semiconductors, pharmaceuticals and some other items. Those tariffs stand in legal limbo, however, after a pair of federal court rulings late last month<\/a>.<\/p>\n

Tariffs remain in place for steel, aluminum<\/a> and autos, as well as some goods from Canada and Mexico.<\/p>\n

Warning signs point to the possibility of elevated prices over the coming months.<\/p>\n

Nationwide retailers like Walmart and Best Buy have voiced<\/a> alarm about potential price hikes as a result of the levies.<\/p>\n

The Organization for Economic Co-operation and Development, or OECD, said<\/a> this month it expects U.S. inflation to reach 4% by the end of 2025, which would mark a sharp increase from current levels.<\/p>\n

The combination of persistent uncertainty alongside solid economic performance may prompt the Fed to hold interest rates steady on Wednesday.<\/p>\n

“We don’t think we need to be in a hurry,” Powell said at a press conference in Washington, D.C., last month. “We think we can be patient.”<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve on Wednesday will issue a new decision on the level of its benchmark interest rate, testing a wait-and-see approach adopted by the central bank in recent months as it observes potential effects of President Donald Trump’s tariff policy. The posture of restraint at the Fed has elicited sharp and repeated criticism from […]<\/p>\n","protected":false},"author":1,"featured_media":11638,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-11637","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-us-news"],"_links":{"self":[{"href":"https:\/\/firearmman.com\/index.php?rest_route=\/wp\/v2\/posts\/11637","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/firearmman.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/firearmman.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/firearmman.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/firearmman.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11637"}],"version-history":[{"count":1,"href":"https:\/\/firearmman.com\/index.php?rest_route=\/wp\/v2\/posts\/11637\/revisions"}],"predecessor-version":[{"id":11639,"href":"https:\/\/firearmman.com\/index.php?rest_route=\/wp\/v2\/posts\/11637\/revisions\/11639"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/firearmman.com\/index.php?rest_route=\/wp\/v2\/media\/11638"}],"wp:attachment":[{"href":"https:\/\/firearmman.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/firearmman.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/firearmman.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}