Federal Reserve Won't Listen to Trump: Rate Cut Not Happening?

In a highly anticipated decision, the U.S. Federal Reserve opted to leave interest rates steady at 4.25%–4.50%, ignoring mounting pressure from former President Donald Trump to deliver an immediate rate cut. 

Fed Chair Jerome Powell made it clear that the central bank’s priority remains tackling inflation, not responding to political demands. As market participants digested the news, investor confidence in a September rate cut dwindled significantly, sparking debates on whether Trump’s influence over monetary policy is waning.

This article breaks down the key takeaways from the latest FOMC meeting, Powell’s reasoning behind holding interest rates, and the political drama surrounding Trump's vocal criticism.

Fed Holds Steady: Inflation Still the Priority

At its July 30–31 meeting, the Federal Reserve reaffirmed its commitment to controlling inflation, keeping the federal funds rate unchanged for the fifth consecutive time. 

Jerome Powell emphasized that inflation remains “somewhat elevated,” with June data showing price levels around 0.5% above the Fed’s 2% target.

Powell explained that although inflation has been slowly easing, the economic outlook is too uncertain—especially with looming trade policies and potential supply-side shocks. He explicitly stated that cutting interest rates prematurely could reignite inflationary pressures, undermining the Fed’s progress so far.

“If you move too soon, you wind up not getting inflation all the way fixed... If you move too late, you might do unnecessary damage to the labor market,” Powell noted.

Read Also: US Inflation Rises Again: What the Latest Data Means for Markets and Crypto

Trump’s Pressure Campaign Falls Flat

Donald Trump has been increasingly vocal in criticizing Powell and the Fed, accusing them of being “too late” in responding to economic threats. 

He has pushed for aggressive interest rate cuts, aiming to ease mortgage costs and stimulate borrowing ahead of the 2026 election season.

However, Powell and the majority of FOMC members showed no indication of bowing to political pressure. In fact, Powell reiterated the Fed's independence and emphasized that rate decisions would be based strictly on incoming data—not political considerations.

Two Trump-appointed governors, Michelle Bowman and Christopher Waller, dissented in favor of a 0.25% rate cut. Still, the overall 9-2 vote demonstrates the committee's broad support for a cautious, data-driven approach.

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Markets Respond: Rate Cut Odds Plunge

Before the meeting, markets priced in a nearly 70% probability of a September rate cut. Following Powell’s comments, that probability sank to below 50%. Treasury yields ticked up, while stock indexes like the S&P 500 and Dow Jones ended the day slightly lower.

Economists like Bill Adams of Comerica Bank believe the Fed may now wait until December for any potential rate move—if inflation data justifies it.

“If the unemployment rate holds steady and tariffs push up inflation, it will be hard to justify a rate cut in the next few months,” Adams said.

Read Also: US Treasury Secretary and Donald Trump: How Debates Sparked Over Jerome Powell

The Data That Matters

With Powell stressing the importance of data, attention now turns to several key indicators. 

The U.S. will release fresh inflation figures for June and a crucial July jobs report in the coming days. These metrics will weigh heavily on whether the Fed acts at its September 16–17 meeting.

Despite a stronger-than-expected US GDP print in Q2, much of that improvement stemmed from falling imports—a sign of weaker domestic demand. That’s a red flag for some analysts who worry that economic momentum may be softening beneath the surface.

Political Crosswinds and Fed Independence

The divide within the Fed is also symbolic of the political tension surrounding monetary policy. Bowman and Waller’s dissenting votes mark the first such split in over three decades, signaling rising internal pressure—but not enough to tip the scales.

Powell, appointed to the Fed by Obama and elevated by Trump, remains a bipartisan figure. His term ends in May 2026, and Waller is considered a possible successor. Yet for now, Powell appears unfazed by external pressure and is keeping the Fed on its course.

The central bank continues to walk a fine line—seeking to maintain inflation control without throttling the job market. 

As Powell puts it, “There should be no doubt that we will do what we need to do to keep inflation controlled. Ideally, we do it efficiently.”

Read Also: US Jobs Data: Slower Hiring and Rising Unemployment Stir Market Jitters

Conclusion

The Federal Reserve's decision to keep interest rates steady sends a strong signal that political pressure—even from a former president—is no substitute for sound monetary policy. 

Powell and the FOMC are waiting for compelling data before considering a rate cut, regardless of Trump’s vocal demands. With inflation still sticky and labor market data mixed, the next few months will be crucial in determining the Fed’s path forward.

As it stands, a September rate cut is far from guaranteed—if it happens at all.

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FAQ

What is the current Federal Reserve interest rate?

The Fed's benchmark interest rate remains in the 4.25%–4.50% range as of the July 2025 FOMC meeting.

Why didn't the Fed cut rates despite Trump's demands?

Fed Chair Jerome Powell emphasized that the decision is driven by economic data, not political influence. The central bank is waiting for more evidence that inflation is sustainably declining before considering cuts.

When could the Fed potentially cut interest rates?

While some hoped for a September cut, Powell indicated that it's too early to decide. Most economists now expect a potential rate cut at the Fed's December meeting, depending on inflation and job data.

What are the risks of cutting rates too soon?

Cutting rates prematurely could reaccelerate inflation, especially with ongoing trade and tariff uncertainties. The Fed wants to avoid repeating past mistakes of loosening monetary policy before inflation is fully under control.

Who dissented in the Fed's latest vote?

Two Trump-appointed governors, Michelle Bowman and Christopher Waller, voted in favor of a rate cut. However, the majority of the FOMC supported holding rates steady.