Federal Reserve to Maintain Rates at 4.25%-4.5% Despite Trump's Demands, Eyes July Cut

The Federal Reserve is poised to maintain its key short-term interest rate at the current level of 4.25% to 4.5% during its upcoming meeting on Wednesday. This decision comes despite persistent pressure from President Donald Trump, who has been vocal about his desire for the Fed to lower rates to stimulate economic growth.

Recent economic indicators have been mixed, with GDP contracting by 0.3% in the first quarter, yet job growth surpassing expectations in April. Inflation has been a focal point, with the Fed's preferred gauge showing a 3.6% rate in the first three months of the year, well above the central bank's 2% target. Concerns about the potential inflationary impact of Trump's tariff policy are influencing the Fed's cautious approach.

Market expectations align with the Fed's likely decision to hold rates steady, with a 97% probability of no change according to CME Group's FedWatch. Analysts and investors are closely watching for any signals from Fed Chair Jerome Powell regarding future rate movements, particularly in light of the ongoing tariff situation. Some anticipate a possible rate cut in July, depending on economic developments and the impact of tariffs.