Fed continues to resist pressure as interest rates remain unchanged

In the United States, the Federal Reserve is gearing up for a meeting this Wednesday, slated to keep its short-term interest rate unchanged for a fifth consecutive time. This stance reflects a fundamental divide between the views of Fed Chair Jerome Powell and former President Donald Trump regarding the health of the economy and the appropriate monetary policy. Trump has publicly criticized the Fed, arguing that lower rates should be enacted due to the perceived positivity in the economy, which he refers to as robust. He believes the high rates result in excessive taxpayer interest payments. In contrast, many economists warn against lowering rates, pointing out that doing so could exacerbate inflation, undermining one of the Fed's foremost mandates: maintaining stable prices. While inflation has decreased significantly, recent upticks in prices have raised concerns among Fed officials about prematurely cutting rates. Therefore, the Fed might be inclined to delay any rate cuts until more clear indicators of economic stability emerge, thus preventing a defensive monetary policy that could lead to inflationary pressures later on.