The U.S. Federal Reserve (Fed) has kept its benchmark interest rate unchanged following the results of the July Federal Open Market Committee (FOMC), amidst renewed criticism from President Donald Trump against Chair Jerome Powell.
On the 31st (local time), Trump wrote on social media (SNS) platform Truth Social, "'Too Late' Powell has done it again." He added, "He is too late to hold the position of Federal Reserve Chair, too angry, too foolish, and too political."
Trump claimed, "While (Chair Powell) inflicts trillions of dollars in losses on America, he is leading the most incompetent or corrupt remodeling of a building in construction history (the remodeling of the Federal Reserve headquarters)."
Trump stated, "In other words, 'Too Late (Chair Powell)' is a complete failure, and America is paying the price."
Despite ongoing pressure from Trump, the Federal Reserve decided the previous day to maintain the benchmark interest rate at the existing range of 4.25% to 4.5%. The Fed explained the background for freezing the rate by stating, "The unemployment rate remains low, and labor market conditions are strong, but inflation is still somewhat high, and uncertainty regarding the economic outlook remains elevated."
Following the FOMC, Chair Powell made remarks that took into account President Trump's call for a rate cut. He said, "The Federal Reserve has been tasked with the clear mission of achieving price stability in Congress and maintaining the labor market as strong as possible," adding, "No Central Bank among advanced economies considers the government's fiscal needs when determining the benchmark interest rate."
Chair Powell also indicated uncertainty about the possibility of reducing interest rates in September, citing the need to assess the impact of the Trump administration's tariff policies on prices.
Chair Powell noted, "Inflation has mostly recovered to the target range of around 2%" but added, "It's important to consider that we are at the very early stage where tariffs are beginning to affect prices." He continued, "The basic premise is that the impact of tariffs could be temporary, but we cannot rule out the possibility that the effects could persist."
Following Chair Powell's press conference, market expectations for a rate cut in September sharply declined. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, participants in the U.S. federal funds futures market are only reflecting a 39.2% probability for a rate cut at the September FOMC, down from as high as 64.6% just a day earlier.