US Fed rate cut not happening soon as Jerome Powell disappoints Donald Trump again

US Fed rate cut is not happening in July as the Federal Reserve Chair Jerome Powell said on Tuesday the Central Bank will continue to wait and see how the economy evolves before deciding whether to reduce its key interest rate. This comes as President Donald Trump has repeatedly urged the Fed to reduce borrowing costs.

President Trump targeted Powell on Tuesday, posting on his social media site: "I hope Congress really works this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come."

Why does Donald Trump want Fed Rate Cut?


President Trump is urging the Fed to cut rates to save the US government money on its interest payments affixed to the vast national debt. Yet the Fed has long resisted considering the government's financing costs when making interest rate decisions, preferring instead to focus on the health of the economy and inflation.

US Fed Interest Rate Cut

The Fed’s 19-member interest rate setting committee, led by the chair, decides whether to cut or raise borrowing costs. They typically increase rates to cool the economy to fight or prevent inflation, and lower rates when the economy is weak to boost borrowing and spending. The Fed’s committee voted unanimously last week to keep its key rate unchanged, though the Fed also released forecasts of future rate cuts that revealed emerging divisions among the policymakers. Seven projected no rate cuts at all this year, two just one, while 10 forecast at least two reductions.

The Fed's cuts last year lowered its rate to about 4.3 per cent. Yet since then it has put reductions on pause out of concern that Trump’s tariffs could push up inflation. The president has slapped a 10 per cent duty on all imports, along with an additional 30 per cent levy on goods from China, 50 per cent on steel and aluminum, and 25 per cent on autos. Yet inflation has steadily cooled this year despite widespread concerns among economists about the impact of tariffs. The consumer price index ticked up just 0.1 per cent from April to May, the government said last week, a sign that price pressures are muted.

FAQs

Q1. Who is Chairman of US Federal Reserve?
A1. Chairman of US Federal Reserve is Jerome Powell.

Q2. Who is President of USA?
A2. Donald Trump is President of USA.