Fed holds US interest rates despite Trump pressure
The Fed said that rates will remain at a range between 4.25pc and 4.50pc, warning that uncertainty in the economy 'remains elevated'.
The central bank said it still anticipated cutting rates by half a percentage point this year. However, it predicted that cuts would come slower than previously expected in future years in a protracted fight to return inflation to its 2pc target.
Emphasising its remit to support maximum employment and inflation of 2pc, it said it 'would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee's goals.'
Meanwhile, it cut its expectations for US GDP growth this year from 1.7pc to 1.4pc, and from 1.8pc to 1.6pc in 2026, compared to its March projections.
It also raised its forecasts for the unemployment rate from 4.4pc to 4.5pc this year and from 4.3pc to 4.5pc in 2026.
Inflation will rise to 3pc this year, up from its March forecast of 2.7pc.
The growth downgrade followed a similar move in March, when the Fed cut its outlook for the US economy in 2025 from 2.1pc to 1.7pc.
Since then, Mr Trump announced sweeping 'reciprocal' tariffs of up to 50pc at the start of April, in a huge escalation of his trade war.
Today's decision came despite Mr Trump stepping up calls for rate reductions. On Wednesday afternoon, he lashed out at Fed chairman Jerome Powell and insisted there was no need to worry about inflation.
'We have a stupid person, frankly, at the Fed. He probably won't cut today,' Mr Trump told reporters.
'We have no inflation, we have only success, and I'd like to see interest rates get down.
'Maybe I should go to the Fed. Am I allowed to appoint myself?'
He added: 'I think he hates me, but that's OK. I've been so nice to him, fellas … I do it every way in the book. I'm nasty, I'm nice. Nothing works.'
Benjamin Shoesmith, a senior economist at KPMG, said: 'The Fed would no doubt be cutting again by now if not for the uncertainty regarding tariffs and a recent escalation of tensions in the Middle East.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
13 minutes ago
- Reuters
Hong Kong's May-July unemployment rises to 3.7%
HONG KONG, Aug 19 (Reuters) - Hong Kong's seasonally adjusted unemployment rate increased to 3.7% in May to July, from 3.5% in the previous three-month period, with rises in major sectors including food and beverage, retail and real estate, the government said on Tuesday. "The sustained growth of the Hong Kong economy should be able to drive job creation, creating more employment opportunities for fresh graduates and school leavers joining the labour force," Chris Sun, the Secretary for Labour and Welfare, said. Government measures to promote economic growth are expected to support the labour demand, he added.
The Independent
15 minutes ago
- The Independent
Starmer hails ‘breakthrough' on security guarantees after crunch White House Ukraine talks
Sir Keir Starmer has hailed a "breakthrough" in efforts to end Vladimir Putin 's invasion of Ukraine as Donald Trump said he would broker a meeting between the Ukrainian and Russian presidents. The PM joined Voldymyr Zelensky, French president Emmanuel Macron and Nato secretary general Mark Rutte for crunch talks in the White House on Monday. And, following the meeting, Sir Keir said the UK and US would begin work on the specifics of security guarantees with the US as soon as Tuesday. "The two outcomes were a real significant breakthrough when it comes to security guarantees, because we're now going to be working with the US on those security guarantees," he told the BBC. "We've tasked our teams, some of them are even arriving tomorrow, to start the detailed work on that." Mr Trump said he had spoken directly with Vladimir Putin to begin planning a meeting between the Russian leader and Mr Zelensky, which will then be followed by a three-way meeting involving himself. The US president said Moscow will "accept" multinational efforts to guarantee Ukraine's security. Mr Zelensky, meanwhile, said he was "ready" for bilateral and trilateral meetings. But he told reporters following the White House meeting that if Russia does "not demonstrate a will to meet, then we will ask the United States to act accordingly". Nato secretary general Mark Rutte said the US and Europe would "do more" on tariffs and sanctions against Russia if the country "is not playing ball" on direct talks with Ukraine, in comments to Fox News. Sir Keir described the talks as "good and constructive" and said there was a "real sense of unity" between the European leaders, Mr Trump and Mr Zelensky. He said Mr Trump's plans to arrange the bilateral and trilateral meetings showed a recognition that Ukraine must be involved in talks. "That is a recognition of the principle that on some of these issues, whether it's territory or the exchange of prisoners, or the very serious issue of the return of children, that is something where Ukraine must be at the table." Mr Trump called the talks "very good". "During the meeting we discussed security guarantees for Ukraine, which guarantees would be provided by the various European countries, with a co-ordination with the United States of America," he posted on his Truth Social platform. "Everyone is happy about the possibility of PEACE for Russia/Ukraine. "At the conclusion of the meetings, I called president Putin and began arrangements for a meeting, at a location to be determined, between president Putin and president Zelensky. "After the meeting takes place, we will have a trilat which would be the two presidents plus myself." The US president met with Mr Putin in Anchorage, Alaska, on Friday, where he declared there was "no deal until there's a deal" to end more than three years of fighting in eastern Europe. "The Alaska summit reinforced my belief that while difficult, peace is within reach and I believe, in a very significant step, president Putin agreed that Russia would accept security guarantees for Ukraine," he said on Monday. "And this is one of the key points that we need to consider." He later said: "We also need to discuss the possible exchanges of territory taken into consideration the current line of contact." Future three-way talks "have a good chance" of stopping the conflict, the US president said. But he appeared to share conflicting views on whether a ceasefire was necessary to stop the war. "I don't think you need a ceasefire," he originally said, before later explaining that, "all of us would obviously prefer an immediate ceasefire while we work on a lasting peace". Mr Trump's envoy, Steve Witkoff, had suggested over the weekend that measures similar to Nato's article five mutual defence provision - that an attack on one member is an attack on the entire bloc - could be offered by the US without Kyiv joining the alliance. Sir Keir welcomed plans for "Article Five-style guarantees" during Monday's talks and said that they would fit with the work of his "coalition of the willing" group of countries. He said to Mr Trump: "With you coming alongside, the US alongside, what we've already developed, I think we could take a really important step forward today - a historic step, actually, could come out of this meeting in terms of security for Ukraine and security in Europe." Sir Keir also described potential future trilateral talks as a "sensible next step". The prime minister had disrupted his holiday plans over the weekend to join calls, including with Mr Trump and Mr Zelensky, before he headed to Washington. Mr Zelensky, whom Mr Trump greeted at the door of the West Wing with a handshake earlier in the evening, wore a black shirt with buttons and a black blazer to the meeting at the White House. His attire had appeared to become a point of irritation for Mr Trump during a previous meeting in February. Early in the meeting, the Ukrainian described the talks as "really good", saying they had been "the best" so far. Mr Zelensky said: "We are very happy with the president that all the leaders are here and security in Ukraine depends on the United States and on you and on those leaders who are with us in our hearts."
The Independent
15 minutes ago
- The Independent
Latest portrait of ‘orange' Trump that will be hung in the White House is revealed
A new, 'orange' portrait of President Donald Trump appears to be the latest in a run of paintings hanging in the White House, with a senior aide teasing there's 'more to come.' Deputy Assistant to the President Sebastian Gorka unveiled the artwork just hours after Trump hosted leaders from across Europe in hopes of finding a path to peace in Ukraine. The new painting shows a non-smiling Trump striding between a row of American flags, wearing a trademark navy suit and red tie combo set to a luminous burnt orange backdrop. 'One of the new @WhiteHouse paintings of President @realDonaldTrump,' Gorka wrote on X Monday evening. 'More to come.' The artist behind the painting, who paid for it and its placement in the White House, was not immediately apparent. On Monday, as nine leaders of European nations and NATO posed for their 'family photo' in the Grand Foyer ahead of a multilateral meeting in the East Room, Trump showed off another new artwork. Flanked by Ukrainian President Volodymyr Zelensky to his right and French President Emmanuel Macron to his left, Trump pointed to a large painting depicting a bloodied president pumping his fist in Butler, Pennsylvania, last summer, after he survived an assassination attempt. 'That was not a good day,' he said. 'That was not a great day. See the picture.' The portrait joins an array of new paintings hung on the White House walls since Trump returned to office in January. In April, the president hung a striking new portrait of himself in the East Wing area with his face painted with the American flag. The picture was wedged between portraits of former first ladies Hillary Clinton and Laura Bush. A month later, the president unveiled a piece in the West Wing that features him alongside former GOP presidents Abraham Lincoln and Ronald Reagan, in front of an American flag. Trump, however, is notoriously particular about his depiction in paintings and portraits hanging in public institutions. The president flew into a fit of rage in March, demanding that a portrait of himself painted by artist Sarah Boardman be removed from the Colorado Capitol building. Trump peddled a conspiracy theory that it was 'purposely distorted' in an alleged petty plot orchestrated by Colorado Governor Jared Polis. The White House has donated a portrait of Trump to the Colorado Capitol to replace one that the president hates. The Independent has contacted the White House for more information.
