Trump Criticizes Jerome Powell after Fed Keeps Interest Rates on Hold

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The Federal Reserve (Fed), the US central bank, kept its benchmark interest rate at 4.25% – 4.50% in its latest policy meeting on Wednesday (29/1/2025). This decision was taken amid stable US economic conditions, but the Fed still faces uncertainty. The Fed also emphasized that it will not rush to cut interest rates shortly.

The decision immediately drew criticism from US President Donald Trump. Through the Truth Social platform, Trump expressed his disappointment with the Fed and its Governor, Jerome Powell.

According to him, the Fed failed to overcome the inflation problem. Trump even stated that he would take his steps to stabilize the economy, such as increasing energy production, reducing regulations, and strengthening the manufacturing sector.

Trump also accused the Fed of focusing too much on issues such as diversity, green energy, and climate change instead of dealing with inflation. “If the Fed spent less time discussing those things, inflation wouldn’t be a problem,” he wrote.

In a press conference after the meeting, Jerome Powell made it clear that the Fed will remain cautious in its decision-making. He emphasized that the current monetary policy is appropriate to deal with economic challenges. Powell also stated that the Fed will continue to monitor economic data before deciding on further interest rate adjustments.

“There is no reason to lower interest rates at this time. We need to see data that shows a decline in inflation or risks to the labor market,” Powell said.

Tensions between Trump and the Fed

The relationship between Trump and the Fed has long been strained. Since his first term, Trump has often criticized the Fed’s policies, especially regarding interest rates. He even demanded that the Fed lower interest rates immediately to support economic growth.

Trump Critics. Source: @realdonaldtrump/Truthsocial

Powell, who was actually nominated by Trump in 2018, emphasized that the Fed will remain independent and unaffected by political pressure. “I will not respond to or comment on the president’s statements. Our job is to focus on appropriate monetary policy,” Powell stressed.

Inflation Still a Challenge

Although inflation has shown signs of declining, the US inflation rate is still above the Fed’s target. In recent months, inflation has stabilized but remained high, especially compared to pre-pandemic levels.

Press release Federal Reserve. Source: federalreserve.gov

The Fed is optimistic that inflation will continue to decline throughout this year. However, it held interest rates while waiting for further data to confirm this trend.

“Economic activity remains solid, and the labor market is stable. We will continue to monitor economic developments before taking further steps,” said the Fed’s official statement.

Powell also warned of the risk of lowering interest rates too quickly, which, according to him, could actually hamper efforts to reduce inflation. The Fed will remain cautious in adjusting monetary policy to ensure long-term economic stability.

Future of Fed Policy

The Fed’s decision to keep interest rates on hold signals that the US central bank will remain conservative amid global economic uncertainty. Meanwhile, political pressure from Trump is likely to continue, especially if inflation does not show a significant decline.

Powell, whose term as Fed Chair runs until May 2026, emphasized that he will not resign despite pressure from the president and believes that the law prohibits the president from Trump’s pressuring the Fed Chair.

Given volatile economic conditions, the Fed will continue to be the focus of discussion regarding the future direction of US monetary policy.