- This comes after the Fed decided on Wednesday to keep the key borrowing rate unchanged, maintaining the federal funds rate in the 3.5% to 3.75% range, in line with market expectations.
- The Fed cut rates by 25 basis points each in the previous three FOMC meetings, ending 2025 with a cumulative reduction of 75 bps.
- The FOMC stated in its announcement that economic activity has been expanding at a “solid pace” even as job gains have remained low.
President Donald Trump on Thursday criticized Federal Reserve Chair Jerome Powell after the Federal Open Market Committee (FOMC) decided to keep interest rates unchanged.
In a Truth Social post, President Trump said Powell kept rates unchanged even though there was no reason to keep them high, adding that this decision is hurting U.S. national security.
“He is costing America Hundreds of Billions of Dollar a year in totally unnecessary and uncalled for INTEREST EXPENSE,” the President stated.
He added that the U.S. should have a substantially lower rate, noting that Powell believes inflation is no longer a problem or threat.
Fed Keeps Rates Unchanged, Cites Solid Economic Activity
This comes after the Fed decided on Wednesday to keep the key borrowing rate unchanged, maintaining the federal funds rate in the 3.5% to 3.75% range, in line with market expectations.
“Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated,” the FOMC stated in its announcement.
This comes after the Fed cut rates by 25 bps at each of the previous three FOMC meetings, ending 2025 with a cumulative reduction of 75 bps.
Government Shutdown, Fed Chair Appointment Looming
The Fed’s rate decision could be followed by other major macroeconomic and political developments, including a potential shutdown of the U.S. government once again, as well as President Trump’s nomination of the next Chair of the central bank.
The U.S. government could enter a partial shutdown beginning at 12:01 a.m. ET Saturday amid opposition from Senate Democrats to a measure passed by the House for funding the Department of Homeland Security, among other agencies, according to a CNBC report.
President Trump is also expected to announce his nominee for the Fed Chair position, which is currently a race between ex-Fed official Kevin Warsh and BlackRock Inc.’s Chief Investment Officer, Rick Rieder.
Meanwhile, U.S. equities declined in Thursday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 0.58%, the Invesco QQQ Trust ETF (QQQ) fell 1.1%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.08%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.
The iShares 7-10 Year Treasury Bond ETF (IEF) edged lower by 0.02% at the time of writing.
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