US Fed policy outlook: Fed chair Jerome Powell says central bank must remain ‘non-political’ as Donald Trump pressure mounts, rate cut still not ruled out

US Federal Reserve Chair Jerome Powell on Tuesday pressured the significance of political neutrality for the central bank, amid renewed pressure from President Donald Trump, who has criticised the Fed for not slicing rates of interest extra aggressively this 12 months.Speaking at a central banking convention in Sintra, Portugal, hosted by the European Central Bank, Powell stated: “We’re trying to deliver macro stability, financial stability, economic stability, for the benefit of all the people. If we’re going to do that successfully, we need to do it in a completely non-political way.”According to AFP, the feedback got here as Trump continues to push the Fed to decrease its key rate, arguing that rate cuts would assist scale back curiosity prices on federal debt and assist financial development. Powell, nonetheless, reaffirmed the Fed’s choice to maintain charges on maintain at round 4.3% whereas assessing the inflationary influence of the president’s sweeping tariffs.“As long as the economy is in solid shape, we think the prudent thing to do is to wait and see what those effects might be,” Powell stated, quoted AP. The Fed, which cut rates of interest thrice in 2024, has saved policy regular in 2025 amid rising uncertainty over commerce policy.Powell famous that inflation is prone to choose up later this summer time, however stated the timing and measurement of the rise as a result of Trump’s tariffs remain unclear. Despite sustaining a cautious stance, Powell did not rule out a rate cut on the upcoming July 29–30 policy assembly.“I wouldn’t take any meeting off the table or put it directly on the table,” he stated.Trump, who has repeatedly criticised Powell in public, renewed his assaults on Monday — this time increasing his criticism to incorporate your complete Federal Reserve Board. “The board just sits there and watches, so they are equally to blame,” Trump stated, escalating pressure on Fed officers like Governor Chris Waller, a Trump appointee who’s seen as a possible successor to Powell when his time period ends in May 2026.In June, Powell had signalled that the Fed would “learn a great deal more over the summer” in regards to the inflationary influence of tariffs — a message extensively interpreted as an indication that any rate cut would possible be delayed till September. But in latest days, two Trump-appointed Fed governors, Waller and Michelle Bowman, stated they do not count on tariffs to trigger persistent inflation and recommended they could assist a rate cut in July.Powell additionally acknowledged that with out the tariffs, the Fed would in all probability be slicing charges already, however the uncertainty has compelled policymakers to pause.Despite Trump’s criticism, markets have to date shrugged off issues about central bank independence, particularly after the US Supreme Court ruled that the president can’t fireplace the Fed chair, reinforcing the establishment’s political insulation.