The US Federal Reserve left its benchmark interest rate unchanged on Wednesday, even amid intense pressure from Donald Trump to lower rates.
Despite an onslaught of attacks from the White House against the Fed, officials at the central bank said that economic uncertainty remains too high to lower rates.
But two of the Fed’s governors voted against the decision – the first time that multiple governors have voted against the majority since 1993. Governors Christopher Waller and Michelle Bowman, both appointed by Trump, wanted rates to be lowered.
Data released on Wednesday underlined the resilience of the US economy, which bounced back faster than expected in the second quarter.
The Fed’s federal open market committee (FOMC) has eight opportunities a year to change interest rates during its scheduled two-day meetings. While the FOMC decreased rates three times in the fall, bringing them down a full percentage point, it left rates unchanged after its last five meetings. Interest rates currently sit at a range of 4.25% to 4.5%.
“Uncertainty about the economic outlook remains elevated,” the Fed said in a statement.
The announcement comes during a big week of economic news. US gross domestic product (GDP) grew at an annual rate of 3% in the second quarter of 2025, according to the latest official data, ahead of the average 2.5% forecast from economists.
This marked a significant acceleration from a 0.5% contraction in the first quarter, which was dragged down by a surge of imports as companies tried to get ahead of Trump’s tariffs. But the rebound was boosted by a 30% slump in imports.
Trump used the news to once again call for a rate cut and again insulted Fed chair Jerome Powell, who he has nicknamed “Too Late.” “2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED! “Too Late” MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!” he wrote on Truth Social.
On Friday, the US Bureau of Labor Statistics will drop its latest job figures, which will show how the labor market held up in July.
Trump is partly to blame for the pause in rate cuts. Fed officials say that the economy has become too unstable to change rates. The Fed has to strike a delicate balance between its “dual mandate”, keeping both unemployment and inflation low. Though the economy was strong at the beginning of the year, Trump’s long slate of tariffs have started to creep into prices, bringing inflation up from 2.3% in April to 2.7% in June.
On Wednesday, executives at the consumer goods giant Procter & Gamble said tariffs were “inherently inflationary” and that US consumers were “under some level of stress” and that the company, long a bellwether of consumer sentiment, was experiencing slowing sales in the US and Europe.
Higher interest rates means it’s more expensive to borrow money for loans such as mortgages. The average mortgage rate is now over 6.5%, up from 3.15% during 2021, when interest rates were close to zero.
Trump has dismissed the Fed’s argument that the economy is too unstable to decrease interest rates and has launched an aggressive attack against the central bank, especially its chair, Jerome Powell, for refusing to budge. Trump has called Powell, whom Trump appointed in 2018 and Joe Biden reappointed in 2022, a “numbskull” who “makes it difficult for people to buy a house”.
Economists say a nonpolitical central bank helps to keep economies stable, and historically, the Fed has remained independent from the White House and Congress. Even the supreme court recognizes this independence: while the court gave Trump the green light to fire labor officials, it specifically said the Federal Reserve is uniquely protected because of its structure.
Though Trump threatened to fire Powell before his term is up in May 2026, the president has since walked back from that threat.
But that has not stopped the president from trying to bully Powell into lowering rates. Over the last few weeks, Trump and other members of his administration have zeroed in on building renovations taking place at the Fed’s headquarters in Washington, which have ballooned in costs over the years.
The Fed says costs have increased due to the nature of the renovations, which focus on two buildings that have not seen major renovations since the 1930s, but Trump has been trying to frame the renovations as extravagant waste.
Last week, Trump donned a hard hat and made a rare presidential visit to the Fed to make a point about the renovations. During remarks to the press, the typically composed Powell appeared visibly irritated as Trump criticized the renovations. During the brief spat, Trump claimed that the renovations cost $3.1bn, though an annoyed Powell pointed out that Trump was including the renovation of a different Fed office building that was completed five years ago.
When asked by reporters if he is still considering ousting Powell, Trump said he doesn’t “think it’s necessary”.
“I believe he’s going to do the right thing,” he said.