Fed Holds Rates at 4.25%–4.50%, Powell Dismisses Trump Pressure

The Federal Reserve left its benchmark federal funds target range unchanged at 4.25%–4.50% on 7 May, the third consecutive meeting without a move. The widely anticipated decision reflects policymakers’ desire for more clarity on the economy before altering borrowing costs. In its statement, the Federal Open Market Committee warned that the risks of both higher inflation and rising unemployment have grown and said uncertainty about the outlook “has increased further.” Officials highlighted President Donald Trump’s broad tariffs as a factor that could simultaneously lift prices and restrain growth, justifying a wait-and-see stance. Chair Jerome Powell underscored the central bank’s independence during his press conference, stating that presidential calls for rate cuts “don’t affect our job at all.” He reiterated that the Fed needs to see further downward progress on inflation before considering an easing cycle. Economic data released ahead of the meeting painted a mixed picture. Weekly Redbook retail sales growth accelerated to 6.9% year-on-year, while MBA mortgage applications rose 11% as the average 30-year fixed mortgage rate slipped to 6.84%. A 10-year Treasury auction cleared at a yield of 4.342%, down from 4.435% previously, suggesting investors expect policy to remain restrictive for now.