The Federal Reserve’s latest move, or lack thereof, is stirring up a storm between economic policy wonks and the White House.
According to Newsmax, the Fed is set to keep its short-term interest rate unchanged this Wednesday, marking the fifth straight meeting with no adjustment, while tensions boil over between Fed Chair Jerome Powell and President Donald Trump on how to steer the economy.
This standoff isn’t just a policy disagreement; it’s a full-on clash of visions. Trump is pushing hard for rate cuts, arguing a robust economy should mean cheaper borrowing, like a top-tier company getting a sweet deal on loans. Meanwhile, Powell and most Fed officials counter that a strong economy needs higher rates to keep inflation from running wild.
Economists expect that two Trump-appointed Fed governors might break ranks and vote for a cut this Wednesday, a rare dissent not seen since 1993. If that happens, it’ll be a clear sign of the internal fractures within the Fed itself.
Trump’s frustration is palpable—he’s claimed the Fed is costing taxpayers billions in interest by not slashing rates, currently sitting at about 4.3% after hikes in 2022 and 2023 to tame rising prices. But Fed officials don’t see their job as easing government borrowing costs on Treasury notes. That’s a fiscal fight they’re not willing to join.
“It’s using monetary policy to ease pressure on fiscal policymakers, and that way points to higher inflation and bigger problems down the road,” warned William English, a Yale economist and former Fed staffer. Nice theory, but when taxpayers are shelling out more for interest, it’s hard not to sympathize with the push for relief over academic caution.
Trump insists there’s “no inflation” to worry about, advocating for a drastic drop to a 1% rate, miles away from the Fed’s modest projections of 3.6% by next year’s end. Fed officials, though, aren’t buying the no-inflation line, especially with recent data showing a bump to 2.7% in June from 2.4% in May, still above their 2% target.
Adding fuel to the fire, core prices—excluding volatile food and energy—edged up to 2.9% from 2.8% in the same span. Powell and his team are also eyeing potential tariff impacts that could nudge inflation higher, making them hesitant to act rashly.
Last week, Trump turned up the heat, criticizing Powell not just on rates but also on the soaring costs of renovating two Fed buildings during a tense on-camera confrontation at the site. By Monday, during a joint appearance in London with British Prime Minister Keir Starmer, he dialed back the rhetoric a bit.
“I’m not going to say anything bad,” Trump remarked alongside Starmer, adding, “We’re doing so well, even without the rate cut.” That’s a diplomatic pivot, but don’t be fooled—the underlying push for action hasn’t faded one bit.
Some economists suggest the Fed might opt for a quarter-point cut in September instead of July, believing the delay won’t rattle the economy much. Fed projections from June show only two rate cuts this year and one in 2026, a far cry from Trump’s aggressive stance or even Wall Street’s expectation of two cuts annually through 2026.
Inside the Fed, opinions vary—Trump appointees like Christopher Waller have voiced concerns about a slowing economy and rising unemployment risks, pushing for a July cut. “The economy is still growing, but its momentum has slowed significantly,” Waller noted. Yet most Fed officials see the job market, with unemployment at a low 4.1%, as healthy enough to wait for more data.
“Continued overall solid economic conditions enable the Fed to take the time to carefully assess the wide range of incoming data,” said Susan Collins, president of the Boston Federal Reserve. That’s a polite way of saying they’re not rushing to appease anyone, even if it means ignoring calls for immediate action.
Looking ahead, clashes between Trump and Powell are likely to persist, especially with the Fed Chair’s term running until May 2026. The divide isn’t just about numbers—it’s about fundamentally different views on the Fed’s role in government finances versus economic stability. For conservatives wary of overreach, this battle is a reminder that unchecked monetary policy can burden taxpayers just as much as any progressive spending spree.
