Fed Holds Rates Steady Amid Economic Uncertainty, Faces Internal Dissent

WASHINGTON: The US Federal Reserve kept its benchmark interest rate unchanged at 4.25% to 4.50% for a fifth consecutive time on Wednesday, despite growing political pressure from President Trump to slash rates. The decision came with rare dissents from two Fed governors, Christopher Waller and Michelle Bowman, who favored a 25-point cut. Chair Jerome Powell cited solid labor market conditions but warned of heightened inflation and economic uncertainty. Trump, citing recent GDP growth data, renewed his criticism of Powell, intensifying concerns over Fed independence. Economists say the Fed is navigating a complex environment, with potential rate cuts hinging on upcoming job reports. Powell hinted a September cut remains possible but not certain. Analysts warn that any deterioration in employment or spike in inflation could challenge the central bank’s balancing act. Powell’s term runs through May 2026.