The Fed ignores pressure from the White House and does not cut interest rates

Without showing urgency to reduce interest rates, and amid the weakness of the dollar and attacks by President Donald Trump, the United States Federal Reserve (Fed) decided to maintain the reference federal funds rate in a range of between 3.5 and 3.75 percent.

The measure was approved by 10 votes in favor and two against, as Stephen Miran, recently appointed by Trump, and Christopher Waller, considered a possible candidate to succeed the president of the central bank, Jerome Powell, wanted to reduce the target range of the federal funds rate by 0.25 percentage points in the first monetary policy meeting of the Fed of the year.

In its statement, the US monetary authority stated that the unemployment rate has shown “signs of stabilization”; while economic activity has been “expanding at a solid pace”, which has given reasons for a pause, which once again confronts the Fed leaders with Trump, who insists on lowering rates (which determines the cost of credit at which companies and people are financed).

After the three consecutive cuts that the Fed made between September and December 2025, the market only expects between one and two additional cuts throughout 2026, compared to the three cuts that were discounted a few months ago.

Amid the investigation into Federal Reserve Chairman Jerome Powell, the US central bank offered little clarity on when rate cuts could resume.

“The Federal Open Market Committee (FOMC) is firmly committed to supporting maximum employment and returning inflation to its 2 percent target. In considering the scope and timing of additional adjustments to the target range for the rate, the committee will carefully evaluate incoming data, the evolving outlook and the balance of risks,” it stated in its monetary policy statement.

In the midst of a storm over the independence of the central bank, Jerome Powell, during his appearance before the press, left a reflection: “the objective of independence (of the Fed) is not to protect particular interests or anything like that. It is an institutional agreement that has benefited the population, by establishing a separation, by avoiding direct financial control by elected officials over the setting of monetary policy.”

The president of the Federal Reserve, who ends his term in May, responded yesterday to a question about what he would say to the person who succeeds him. “Stay out of politics, don’t get carried away by politicians. Don’t do it.”