Trump’s Fight With the Fed Won’t End With Rate Cuts
President Trump wants the Fed to slash borrowing costs, but the central bank is unlikely to take such aggressive steps even once it begins to lower interest rates.
The exact timing will depend mainly on what is happening with inflation and the labor market, two indicators that are subject to considerable uncertainty given the ever-changing nature of President Trump’s tariffs and other economic policies.
Jerome H. Powell, the chair of the Federal Reserve, made that point clearly on Wednesday after the Fed’s decision to hold interest rates steady for a fifth-straight meeting. The vote was not unanimous, with two members of the Board of Governors dissenting in support of a quarter-point cut, the first time two policymakers of that stature have opposed a monetary policy decision since 1993.
Speaking at a news conference after the Fed’s July meeting, Mr. Powell kept open the option of a cut as early as September, when the central bank next meets. But he stopped far short of signaling that such a move was locked in.
