Fed leaves key interest rate stable – Trump sharply attacks Powell!

Fed leaves key interest rate stable – Trump sharply attacks Powell!

The US Federal Reserve (Fed) has decided to leave the key interest rate at 4.25 to 4.5 percent. This is the fourth decision in a row where interest rates are not adjusted. Fed Chairman Jerome Powell announced this on June 18, 2025 with no further action, despite President Donald Trump's continued calls for a rate cut. Trump hopes that such a cut will bring positive stimulus to the US economy, but the Federal Reserve reiterates its independence from political instructions and does not comment on the demands of the president, who has criticized Powell as a "stupid person."

The Fed's new economic forecasts show that the inflation rate for 2025 is now estimated at 3.0 percent, compared to 2.7 percent previously. The growth forecast has also been revised downwards. The Fed expects the US economy to grow by just 1.4 percent instead of the previously forecast 1.7 percent. These adjustments include, among other things, the uncertainties created by Trump's tariff policies, which force companies to pass on increased costs to consumers. The inflation rate is expected to be 2.9 percent in 2023 and fall to 2.8 percent in 2024.

Criticism of interest rate policy

President Trump has repeatedly criticized Chairman Jerome Powell over his interest rate policy. While the Federal Reserve is trying to combat inflation through high interest rates, Trump sees these decisions as a threat to economic growth. He argues that lower interest rates would provide the support needed to spur growth. Despite these demands, the Fed remains steadfast and emphasizes that it does not want to be pressured by the government in its decisions in order to keep long-term inflation under control.

The Fed's last interest rate cut took place in December 2024, after the central bank had previously raised interest rates several times during the Corona crisis. These latest developments shed light on the strained relationship between the government and the central bank and raise questions about future monetary policy.

How the situation will develop further remains to be seen. It will likely be a challenge for Powell to combat inflation while withstanding pressure from Trump and other political players seeking faster economic growth.

Analysts and economists are closely monitoring these developments as they could have far-reaching implications for the U.S. and global economies. For more information on the Federal Reserve's current decisions, please visit Deutschlandfunk and Time.