The US in brief: The Fed holds its nerve, and its rate

Economist

2 days ago

The Federal Reserve held its benchmark interest rate at 4.25-4.5%. Two rate-setters, Christopher Waller and Michelle Bowman, voted against the decision—the first ' double dissent ' by members of the Fed's board in more than 30 years. The central bank's decision will anger Donald Trump, who has been calling for lower borrowing costs and publicly toying with the idea of ousting Jerome Powell, the Fed's chairman.
The administration made a dizzying array of trade announcements in advance of its invented deadline, set for tomorrow, for countries to sign trade deals with America or face high(er) tariffs. It trumpeted deals with South Korea, Cambodia and Thailand. Mr Trump increased levies on many Brazilian goods from 10% to 50%, citing the ' extraordinary threat ' its government poses to America. He also threatened India with tariffs of 25% on its goods and an unspecified 'penalty' because it imports Russian oil and weapons. And certain copper products, including pipes and cables, will face tariffs of 50% from tomorrow.
Democrats on the Senate Homeland Security and Governmental Affairs Committee used an arcane law to demand that the Justice Department release documents related to the late Jeffrey Epstein, a convicted child molester. The 'rule of five' allows a group of five committee members to request information relevant to its remit from federal agencies. The provision, introduced in 1928, has seldom been used, so its effectiveness is unclear.
The Senate voted 52-44 to confirm Joe Kent as head of the National Counterterrorism Centre. Mr Kent, a former Green Beret and CIA agent, has served as an aide to Tulsi Gabbard, the director of national intelligence. Democrats objected to his nomination because of his association with far-right figures and track record of promoting the 'Fedsurrection' conspiracy theory, which holds that the FBI initiated the storming of the Capitol on January 6th 2021.
Republicans in Texas's legislature unveiled a proposal to redraw the boundaries of the state's electoral districts to help them win five extra seats in America's House of Representatives at the midterms in 2026. Republicans have a majority in both chambers of the Texas legislature, but Democrats have in the past fled the state, making the legislature inquorate, to block similar efforts. Texas's gambit has sparked talk about other states, both Republican- and Democrat-controlled, doing the same.
Kamala Harris said she would not run to be California's governor in 2026. Despite her defeat in the presidential election in 2024, it had been widely presumed that the former vice-president would both bid to lead her home state and be the strong favourite. Her decision blows the Democratic primary wide open. Gavin Newsom, the current Democratic governor, cannot serve a third term.
Fix up, look sharp
Initially Mr Trump was keen to eliminate the Federal Emergency Management Agency, which oversees disaster relief. After a flood in Texas in early July killed more than 135 people, he softened. Now his administration talks of making FEMA more 'efficient'. Read our story on how America is remaking its disaster-relief system and trying to get rid of perverse incentives.
A view from elsewhere
'Trump is extractive, not transactional as the lazy cliché goes,' wrote Prashant Jha in the Hindustan Times, an Indian newspaper. 'It is not about a give and take; it is predominantly about take, with a little bit of give.' He gets away with it because America 'is very powerful and the costs of a retributive Trump are very high'. And 'no one believes in the only other option, which is collective resistance.'
Figure of the day
Up to $500m, the amount that Harvard University is reportedly prepared to pay to get the Trump administration off its back. Columbia University and the University of Pennsylvania have both already paid up, and yesterday the administration succeeded in shaking down Brown University. Read our story about what the president is teaching America's richest university.
Today's poll
Every week YouGov polls Americans on behalf of The Economist. Yesterday the administration said it would revoke the 'endangerment finding', a declaration by the EPA in 2009 that greenhouse gases are a risk to health. Yet a plurality (37%) of Americans want government restrictions on greenhouse-gas emissions expanded, and 21% want them kept the same. Only 24% wanted restrictions reduced or eliminated.
Daily Quiz
From Monday to Thursday we'll quiz you on all things American. To mark Mr Trump's visit to his Scottish golf courses, this week's questions are on previous presidents who have shared his passion for the links.
Thursday: Which president was the first to install a putting green on the White House lawn?
Wednesday: An ancestor of George H.W. Bush and George W. Bush gives his name to one of golf's oldest international tournaments, held on the Old Course at St Andrews since 1922. What is it called?
See how to take part in the quiz at the bottom of this page.
If you enjoyed this week's questions, play Dateline, The Economist' s history game.
Seen on Truth Social
'Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them. Oh' Canada!!!'
—Donald Trump invents another reason to impose tariffs on America's trading partners.