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The Federal Reserve is expected to keep its interest rate steady on Wednesday for the fifth consecutive meeting, highlighting a growing divide between Fed Chair Jerome Powell and President Donald Trump over the direction of the U.S. economy.
The Fed’s decision is anticipated to draw dissent from at least two members of its board of governors, both of whom were appointed by Trump and may vote to lower rates. If they do, it would mark the first time since 1993 that two governors have voted against the chair on a rate decision.
At the heart of the disagreement is a sharp contrast in economic philosophy. Trump argues that the nation’s strong economy justifies a rate cut, comparing the United States to a blue-chip company that should borrow at lower costs. In contrast, Fed officials and most economists maintain that strong economic performance supports keeping rates higher to prevent inflation from accelerating.
“I’d argue that our interest rates are higher because our economy’s doing fairly well, not in spite of it,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities.
Trump has also criticized Powell directly, claiming that the central bank’s policies are costing taxpayers hundreds of billions in unnecessary interest payments. But Fed officials argue their job is to ensure price stability and full employment, not to manage the government’s borrowing costs.
In response to last year’s inflation spike, the Fed raised its key short-term rate to roughly 4.3 percent. Officials have signaled that they may cut rates by up to half a percentage point by the end of the year.
Tensions between Trump and Powell have grown in recent weeks. Last Thursday, the two clashed publicly during Trump’s visit to a construction site for the Fed’s headquarters renovation, a project that has drawn criticism from the White House over its cost. On Monday, during a press conference in London with British Prime Minister Keir Starmer, Trump softened his tone but still pressed his case.
“I’m not going to say anything bad,” Trump said. “We’re doing so well, even without the rate cut. But a smart person would cut.”
Trump has called for rates to fall to 1 percent, while Fed projections released in June suggest just two cuts this year and one more in 2026, with rates expected to sit at 3.6 percent by the end of next year.