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Fed should maintain interest rates even under pressure from the White House

The decision is set to be announced this Wednesday afternoon, followed by a press conference with Federal Reserve Chairman Jerome Powell.

In recent months, U.S. President Donald Trump has been pressuring the Fed to cut interest rates, criticizing Powell, who has stated he will not yield to the demands.

Last week, Donald Trump accused Powell of acting against the U.S. economy, advocating for a three-percentage-point reduction in interest rates.

Powell’s term as head of the Fed ends in May 2026, and U.S. Treasury Secretary Scott Bessent sees no immediate reason for his resignation.

The Fed Chairman has expressed his intention to fulfill his term, despite Trump’s dismissal threats.

Analysts believe that despite White House pressure, the Fed is unlikely to yield, predicting interest rates will remain unchanged for the fifth time this year.

Michael Krautzberger, the global head of investment in public markets at Allianz Global Investors, expressed in a statement his expectation for the Fed to keep interest rates steady at Wednesday’s meeting.

“The first six months of the Trump administration have been especially tumultuous for economic policymakers, marked by shocks and increased uncertainty. Expectations for growth and inflation in 2025 have been highly volatile […]. Recent U.S. macroeconomic data reflect the challenges faced by the Federal Reserve,” he noted.

BPI also anticipates the Fed will maintain interest rates, highlighting the divergence of opinions within the reserve itself, with more cautious groups predicting at most one interest rate cut this year, while the “more accommodative wing” projects at least two reductions.

In a similar vein, EY-Parthenon’s chief economist, Gregory Daco, foresees the maintenance of the rates, but noted it “will be interesting to see if Powell hints at potential monetary policy easing by year-end or, conversely, avoids any indication.”

On June 18, the Fed again left interest rates unchanged amid uncertainty over the impact of U.S. tariffs.

The U.S. central bank’s benchmark rates thus remained in the 4.25%-4.5% range, as already anticipated by markets and analysts.

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