The Federal Reserve held interest rates steady on Wednesday, just days after President Donald Trump made an unusual visit to the central bank, calling for a rate cut.
The central bank has defied Trump’s public criticism for months, adopting a wait-and-see approach as central bankers observe the effects of tariffs.
“Uncertainty about the economic outlook remains elevated,” Federal Open Market Committee (FOMC), a policymaking body at the Fed, said on Wednesday.
Two Fed governors appointed by Trump — Michelle Bowman and Christopher Waller — dissented from the 12-member vote, saying they would prefer a quarter-point rate cut. It marked the first time two Fed governors have voted against the majority since 1993.
Five meetings and seven months have elapsed since the Fed last adjusted interest rates. The federal funds rate stands between 4.25% and 4.5%, preserving much of a sharp increase imposed in response to a pandemic-era bout of inflation.
The decision on interest rates came hours after a government report showed better-than-expected economic growth over three months ending in June, though a statistical quirk accounted for a significant portion of the sturdy performance.
In theory, robust economic growth eases pressure on the Fed to lower interest rates, since consumers and businesses appear undeterred by high borrowing costs.
Trump has repeatedly urged the central bank to lower interest rates, saying the policy would boost economic performance and reduce interest payments on government debt.
“We have a man who just refuses to lower the Fed rate,” Trump said of Powell last month. “Maybe I should go to the Fed. Am I allowed to appoint myself? I’d do a much better job than these people.”
The Fed is an independent agency established by Congress. Trump is legally barred from appointing himself the head of the central bank.
In recent weeks, Trump has also slammed Powell, citing cost overruns tied to the central bank’s $2.5 billion building renovation project.
The Fed attributes spending overruns to unforeseen cost increases, saying that its building renovation will ultimately “reduce costs over time by allowing the Board to consolidate most of its operations,” according to the central bank’s website.
Federal law allows the president to remove the Fed chair for “cause” — though no president has ever done so. Powell’s term as chair is set to expire in May 2026.
President Donald Trump points to a cost sheet as he speaks with Federal Reserve chair Jerome Powell as Trump visits the Federal Reserve in Washington, D.C., on July 24, 2025.
Andrew Caballero-Reynolds/AFP via Getty Images
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 modest.
The central bank, however, issued a forecast last month indicating some concern about a rekindling of inflation due to elevated tariffs. Importers typically pass along a share of the higher tax burden in the form of price hikes.
Tariffs contributed modestly to the rise of inflation in June, though overall price increases owed largely to a rise in housing and food products with little connection to tariffs, analysts previously told ABC News.
Despite its patient approach, the Fed last month forecast two quarter-point interest-rate cuts over the remainder of 2025, carrying over a prediction issued in March.
Earlier this month, Powell said he would not rule out a potential interest rate cut as soon as the July meeting.
“I wouldn’t take any meeting off the table or put any on the table,” Powell told the panel at the European Central Bank forum in Sinatra, Portugal. “It depends on how the data evolve.”
