The Fed keeps interest rates unchanged in the United States and defies pressure from Donald Trump

The Fed, the US central bank, had lowered interest rates by a quarter point at its previous meeting in December to leave them in a range between 3.5% and 3.75%.

This Wednesday’s vote ended 10-2 for maintaining reference interest rates in that range. Officials noted that the unemployment rate has shown “signs of stabilization” while economic activity has been “expanding at a solid pace.”

“The economy is expanding at a solid pace. Job creation remains low and the unemployment rate shows signs of stabilization. Inflation remains somewhat high“, they said from the Fed in a statement.

The decision to keep rates unchanged has been supported by ten of the twelve governors who make up the Federal Open Market Committee (FOMC), the Federal Reserve body that decides on the price of money.

Two allies of Donald Trump on the board of governors, Stephen Miran and Cristopher Waller – one of the candidates to replace the president of the Federal Reserve, Jerome Powell – they voted for a reduction of a quarter point.

Fed statement following two-day FOMC meeting offers more optimistic language about the progress of the economy American and does not include December’s mentions of the “balance of risks” and risks in the labor market.

Trump, in favor of lower interest rates to boost the economy, maintains a strong confrontation with Powell that has led him to insult him and question him in public and the Department of Justice has opened a criminal investigation into him for the cost overruns of the reform of the institution’s headquarters.

The Fed’s decision to leave rates unchanged will likely draw more criticism from Trump, who has attacked Powell for months for not slashing short-term rates.

When the Fed lowers its key rate, it tends to lower borrowing costs for mortgages, auto loans or commercial loans, although those rates are also influenced by market forces.

A key issue facing the Fed is how long it will remain on pause. The rate-setting committee remains divided between those who oppose further cuts until inflation subsides, and those who want to lower rates to further support hiring.

Most economists predict the Fed will cut rates twice this year, probably at the June meeting or later.

Central bank officials met in the shadow of unprecedented pressure from Trump. Powell revealed on Jan. 11 that the Fed had received subpoenas from the Justice Department as part of a criminal investigation into his testimony before Congress about a $2.5 billion renovation of the institution’s headquarters.

The official, in a video with unusually direct language, charged that the subpoenas were a pretext to punish the bank for not reducing rates more quickly.

Last week, the Supreme Court took up Trump’s attempt to fire Fed Governor Lisa Cook over allegations of mortgage fraud, which she denies. No president has fired a governor in the 112-year history of the monetary entity. The justices, in oral argument, seemed leaning toward allowing him to remain on the job until the case is resolved.

At the same time, Trump has suggested he is close to naming a new Fed chair to replace Powell once his term ends in May. The announcement could come as soon as this week, although it has been delayed before.

The president’s efforts to pressure the Fed may have backfired, economists say, as even Republicans in the Senate expressed support for Powell and threatened to block whoever Trump’s next nominee is.