Jerome Powell dismisses pressure from Donald Trump while Federal Reserve keeps borrowing costs unchanged

The Federal Reserve opted to keep interest rates unchanged in its first meeting since Donald Trump began his second term as president.

The move comes after Trump made it clear that he wants the Fed to lower rates immediately, stating outright that he would “demand that interest rates drop immediately.”

However, the central bank didn’t budge, maintaining its benchmark borrowing costs between 4.25 percent and 4.5 percent.

Powell Dismisses Presidential Pressure

Despite Trump’s calls for rate cuts, Fed Chair Jerome Powell made it clear that the decision was independent of political influence.

Speaking at a press conference after the announcement, Powell emphasized that he had “no contact” with the president regarding the matter.

He reiterated the Fed’s commitment to making decisions based on economic data rather than political pressure.

“We are keeping our heads down and doing our work, and that’s how we best serve the public,” Powell stated.

Market Reacts to Fed’s Decision

Investors were quick to respond, with stocks taking a hit following the announcement.

The S&P 500 dropped by 0.7 percent, the Dow Jones Industrial Average declined by 0.4 percent, and the Nasdaq saw a sharper fall, tumbling more than 1 percent.

While most market watchers had anticipated the Fed would hold rates steady, the slight shift in its stance on inflation caused some uncertainty.

Inflation Concerns Take Center Stage

A key shift in the Fed’s post-meeting statement was its revised language on inflation.

In December, the Fed acknowledged that inflation was making progress toward its 2 percent goal.

However, this time around, that reassurance was removed, with officials instead stating, “Inflation remains somewhat elevated.”

The latest data shows consumer prices were up 2.9 percent year-over-year in December, marking the largest monthly increase in nine months.

Future Rate Cuts Still on the Table?

While investors had largely anticipated this decision, attention is now turning to whether the Fed will consider rate cuts later in the year.

Powell signaled a cautious approach, noting that while inflation remains a concern, the labor market continues to show resilience.

“We do not need to be in a hurry to adjust our policy stance,” he stated.

What’s Next for the Fed and the Markets?

With inflation concerns persisting and Trump advocating for lower rates, all eyes will be on the Fed’s upcoming meetings and economic indicators.

Investors and analysts will be watching closely for any signals on future rate cuts, especially as the administration continues to push for more accommodative monetary policy.

This is a developing story. More updates to follow.

This article was published on TDPel Media. Thanks for reading!

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