What's happened
The Federal Reserve has maintained interest rates at 4.25% to 4.5%, despite President Trump's calls for cuts. Fed Chair Jerome Powell emphasized the need to assess the impact of tariffs on inflation before making any adjustments. Some Fed officials, however, are advocating for potential rate cuts as early as next month.
What's behind the headline?
Current Economic Landscape
- The Federal Reserve's decision to hold rates reflects a cautious approach amid economic uncertainty.
- Trump's tariffs have created a complex environment, with potential inflationary pressures that the Fed must navigate.
Diverging Opinions Within the Fed
- Some Fed officials, like Christopher Waller and Michelle Bowman, advocate for rate cuts, arguing that current inflation levels do not warrant inaction.
- Others, including Richmond Fed President Thomas Barkin, caution against rushing into cuts, citing ongoing inflation concerns.
Implications for the Economy
- The Fed's stance indicates a wait-and-see approach, which may lead to delayed responses to economic shifts.
- If inflation rises significantly due to tariffs, the Fed may face pressure to act more decisively, impacting consumer borrowing costs and economic growth.
What the papers say
According to The Guardian, Fed Chair Jerome Powell stated that the central bank is well-positioned to wait for more data on tariffs' effects before adjusting rates. In contrast, Business Insider UK highlights that some Fed officials, like Waller, believe rate cuts should be considered soon, suggesting a split within the Fed on the appropriate response to current economic conditions. The NY Post emphasizes Trump's ongoing criticism of Powell, calling for immediate cuts, while AP News notes that inflation has not surged as initially feared due to tariffs, complicating the Fed's decision-making process.
How we got here
The Fed's decision comes amid ongoing pressure from President Trump, who has criticized the central bank's independence and called for aggressive rate cuts. Recent economic indicators show mixed signals, with inflation rising and growth projections downgraded.
Go deeper
- What are the potential impacts of Trump's tariffs?
- How does the Fed's decision affect consumers?
- What are the differing views among Fed officials?
Common question
-
What Are the Latest UK Sanctions on Russia and Their Impact?
As tensions escalate due to Russia's ongoing war in Ukraine, the UK has announced new sanctions aimed at crippling Russia's military and energy sectors. This page explores the latest developments in UK sanctions, their implications for international relations, and the potential consequences for the global economy.
-
What Should You Know About the New COVID Variant Nimbus?
The emergence of the COVID variant Nimbus has raised concerns globally, particularly in the UK and Southeast Asia. As cases rise, many are left wondering about its symptoms, vaccine effectiveness, and the measures being taken to control its spread. Here are some key questions and answers to help you understand what to expect.
-
How Does the Fed's Decision to Hold Rates Impact the Economy?
On June 18, 2025, the Federal Reserve decided to maintain interest rates amid economic uncertainty. This decision raises several questions about its implications for inflation, economic growth, and how it compares to actions taken by other central banks. Here are some common questions people have regarding this significant monetary policy decision.
-
Why Did the Fed Decide to Hold Interest Rates Steady?
On June 18, 2025, the Federal Reserve made a significant decision to maintain interest rates despite external pressures, particularly from President Trump. This choice raises questions about the current economic landscape, inflation expectations, and the Fed's future actions. Below, we explore the implications of this decision and what it means for the economy.
-
How Does the Federal Reserve's Decision to Hold Rates Impact the Economy?
The Federal Reserve's recent decision to maintain interest rates has sparked significant discussion about its implications for the economy. With President Trump exerting pressure for rate cuts, many are left wondering how these decisions will affect inflation, consumer spending, and overall economic growth. Below, we explore common questions surrounding this topic.
More on these topics
-
Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
-
Jerome Hayden "Jay" Powell is the 16th Chair of the Federal Reserve, serving in that office since February 2018. He was nominated to the Fed Chair position by President Donald Trump, and confirmed by the United States Senate.
-
The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
-
The Federal Reserve System is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the m
-
Christopher J. Waller is an American economist who is a member of the Federal Reserve Board of Governors. Waller was nominated to and confirmed as a member of the Board of Governors in December 2020.
-
Michelle White "Miki" Bowman (born May 25, 1971) is an American attorney who has served as a member of the Federal Reserve Board of Governors since 2018. She is the first person to fill the community bank seat on the board, a seat created by a 2015 law...
-
Israel, formally known as the State of Israel, is a country in Western Asia, located on the southeastern shore of the Mediterranean Sea and the northern shore of the Red Sea.
-
Iran, also called Persia, and officially the Islamic Republic of Iran, is a country in Western Asia. It is bordered to the northwest by Armenia and Azerbaijan, to the north by the Caspian Sea, to the northeast by Turkmenistan, to the east by Afghanistan a
-
Switzerland, officially the Swiss Confederation, is a country situated in the confluence of Western, Central, and Southern Europe. It is a federal republic composed of 26 cantons, with federal authorities based in Bern.
-
James David Vance is an American author and venture capitalist. He is best known for his memoir Hillbilly Elegy, about Appalachian values and their relation to the social problems of his hometown, which attracted significant media attention during the 201