US Fed Meeting: FOMC In No Hurry! Powell Keeps Rate Steady For 4th Time, Defying Trump's Demand AGAIN

US Fed Meeting: The US Federal Reserve chair is on the hot seat once again, as he and his team defied President Donald Trump's demand for a rate cut by keeping key interest rates unchanged for the fourth time on Wednesday, June 18. Powell said the FOMC is well-positioned to wait on easing rates, hours after Trump called him stupid and asked whether he was allowed to run the Federal Reserve.

Even when the Fed believes the US economy has defied all shocks time after time and is currently solid, it decided to keep the federal funds rate at 4-1/4 to 4-1/2 per cent, unchanged for the fourth consecutive policy this year.

US Federal Reserve Jerome Powell's Speech Highlights:

Why is the Fed not budging to cut rates? Powell, in his speech, said that the US economy has defied all kinds of forecasts for it to weaken, really over the last three years. He said the committee does not see any signs of weakening currently.

"The cost of tariff has to be paid," Powell said. FOMC believes inflation remains elevated and the impact of tariffs has started to show signs.

Powell said, "Changes to trade, immigration, fiscal and regulatory policies continue to evolve and their effects on the economy remain uncertain. the effects of tariffs will depend on their ultimate level. Expectations of the level and economic effects reached a peak in April and have since declined. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity."

"The effects on inflation could be short-lived, reflecting a one-time shift in the price level. It's also possible that the inflationary effects could be more persistent. Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices and ultimately on keeping longer-term inflation expectations well accurate," he added.

Accordingly, Powell reiterated that FOMC's obligation is to keep longer-term expectations anchored and prevent a one-time increase from becoming an ongoing problem.

He added, "We will balance our maximum employment and price stability mandates, keeping in mind that without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans."

For the time being, Powell said, "We are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance."

FED POLICY OUTCOMES...

FOMC's federal funds rate decision revolves around its objective to achieve maximum employment and inflation at the rate of 2% over the longer run.

Although uncertainty about the economic outlook has diminished, FOMC's statement said, "but remains elevated."

It added, "Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated."

Thereby, FOMC is attentive to the risks to both sides of its dual mandate.

In assessing the appropriate stance of monetary policy, FOMC said they will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Trump Vs Powell:

President Trump has verbally shown his displeasure over the rates decision from the Fed since he took over the White House. He wants the rate to be cut, which the Fed has been shrugging off.

Hours before Fed policy, on June 18, Trump took a jibe at Powell by calling him 'stupid'. Trump even went on to throw a question of whether he can run the Federal Reserve instead of Powell.

Speaking to reporters at White House, Trump, "We have a stupid person at the Fed...," adding, "Maybe I should go to the Fed." He then dropped the bombshell by saying, "Am I allowed to appoint myself at the Fed? I'd do a much better job than these people."

It needs to be noted that Trump had already predicted a pause in federal rates in June 2025 policy as well.