Powell vs. Trump: Fed Holds Rates, But Tensions Are Rising
The U.S. Federal Reserve ended its July policy meeting by keeping interest rates unchanged at 4.25%–4.50%. While this was expected by most traders, the real focus is on the growing tension between Fed Chair Jerome Powell and President Donald Trump.
Powell made it clear that the Fed will continue to fight inflation, which is still above the 2% target. He did not give any signal about rate cuts, and instead showed confidence in a wait-and-see approach.
Trump’s Tariffs Blamed for Inflation
President Trump has blamed the Fed for keeping rates too high and slowing the economy. But Powell disagreed, saying that Trump’s own tariff policies are pushing up prices. These 15% import taxes on goods from Europe and China have made everyday items more expensive, causing higher inflation.
This statement has added fuel to the Fed vs. White House clash, making it a key story for Forex traders and long-term USD movement.
Divisions Inside the Fed
Even inside the Fed, there is some disagreement. Two Fed officials—Michelle Bowman and Christopher Waller—may not support the current decision to hold rates. Both were appointed by Trump and are seen as more in favor of early rate cuts.
This shows that there could be more internal debate in future meetings, which might bring more volatility to the Forex market.
Confidence in the Dollar at Risk
Global investors are now watching closely. The IMF has warned that political pressure on central banks can hurt market confidence. If the Fed looks weak or influenced, it could lead to volatility in the bond market, weaker trust in the Fed, and long-term pressure on the U.S. dollar.
Impact:
The Fed might keep rates steady in the coming months, but continued political pressure from Trump could possibly bring uncertainty in the USD and increase Forex market volatility ahead of the next meeting.