Federal Reserve holds interest rates, defying Trump’s demand to lower them
The US Federal Reserve kept interest rates on hold, but signaled it might make two cuts this year, as Donald Trump continues to break with precedent and demand lower rates.Policymakers at the American central bank lifted their projections for inflation this year, as the US president stands by his controversial tariff plans, and downgraded their estimates for economic growth.Uncertainty has faded, they said, but remains significant.The Fed chair, Jerome Powell, cautioned that officials expect tariffs imposed by Trump to increase prices over the course of the summer.“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell told reporters.
“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 persistent inflation “will depend on the size of the tariff effects” and how long it takes them to affect prices, Powell added.Hours before the central bank announced its latest decision, Trump called Powell “stupid” and accurately predicted rates would be maintained on Wednesday.“He’s a political guy who’s not a smart person, but he’s costing the country a fortune,” Trump, whose attacks have raised questions over the Fed’s independence, claimed of Powell.
The central bank has repeatedly stressed it makes decisions based on economic data, rather than political interventions.Policymakers at the central bank expect inflation to increase by a median rate of 3% this year, according to projections released alongside its latest decision on Wednesday, up from a previous estimate of 2.7% – and highlighting how far the US remains from the Fed’s inflation target of 2%.As Trump’s aggressive tariffs agenda continues to disrupt the global economy, and raises concern about price growth, officials at the Fed have repeatedly warned of an uncertain road ahead.They expect the US economy to grow by a median rate of 1.
4% this year, down from March’s 1.7% estimate, which itself was a significant downgrade from the previous 2.1% estimate in December.As the Fed confirmed on Wednesday that a targeted federal funds rate had been held at a range of 4.25% to 4.
5% following its rate-setting open market committee’s latest two-day meeting, it said: “Uncertainty about the economic outlook has diminished but remains elevated,”A closely watched “dot plot”, which shows policymakers’ predictions for the trajectory of rates, indicated that most expect to cut rates at least twice in 2025, with further cuts in future years,But officials do not universally agree on the path ahead,Seven of the nineteen officials on the committee do not expect to cut rates at all this year,“We have a pretty healthy diversity of views on the committee,” Powell told reporters, citing differences in economics predictions and views on how the Fed should respond.
“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace,” the committee said in a statement,“The unemployment rate remains low, and labor market conditions remain solid,Inflation remains somewhat elevated,”The central bank has so far defied Trump’s attacks on its decisions, holding firm on its independence from the White House,After Powell spoke with the US president last month, the Fed said that he had made clear that its actions “will depend entirely on incoming economic information and what that means for the outlook”.
Wall Street rose after the announcement on Wednesday, but later slipped back.By mid-afternoon in New York both the benchmark S&P 500 and the Dow Jones industrial average were broadly flat.Ryan Sweet, chief US economist at Oxford Economics, said: “The Federal Reserve’s crystal ball is still clouded and feeds into its bias toward being reactionary, rather than preemptive.”Looking ahead, Powell expressed concern over cuts to US statistical agencies that produce data on the economy.While he stressed the Fed was still able to do its job, he warned of “more volatility” in surveys as a result of layoffs.
“The United States has been a leader for many, many years in this whole project of measuring, and understanding what’s happening in our very large and dynamic economy,” he said.“And I hate to see us cutting back on that, because it is a real benefit to the general public.”
Eric Cantona and Ella Toone help meld football and art for Manchester festival
“Everybody needs his own ritual or way of preparing,” says the former Dutch footballer Edgar Davids. “Those minutes that you’re in the tunnel is where we’re going to start.”Davids is talking about a piece he has worked on alongside the artist Paul Pfeiffer in which the pair recreate the tension of the tunnel before a big game.The work will serve as the passageway into the “set piece” of this year’s Manchester international festival – Football City, Art United – where the beautiful game is moving off the pitch and into the artist’s studio.“It’s now more important than ever to bring things together,” says Hans Ulrich Obrist, who has co-curated the exhibition alongside Josh Willdigg and the former Manchester United midfielder Juan Mata
At a festival, are you Elinor or Marianne? | Brief letters
Your articles presented two entertaining but very different approaches to kitting yourself out for a music festival (‘A godsend at 5am’, 12 June; Field the love, 13 June). One was all boots and head torches, the other pretty dresses and earrings. How appropriate, in this Jane Austen anniversary year, to see the contrasting demands of Sense and Sensibility so clearly set out.Mary RooksLeicester Adrian Chiles’ piece (Who could deny a hot, tired delivery driver the fruit from their cherry tree?, 12 June) reminded me of a tree we had at the front edge of our garden by the pavement. When its luscious red fruits were ripe, we’d often see someone pluck a handful, only to spit them out a moment later
Speaking out on Gaza: Australian creatives and arts organisations struggle to reconcile competing pressures
As cultural institutions respond to political statements on the war, many artists say they face a choice between career opportunities and standing up for their beliefsGet our weekend culture and lifestyle emailWhen Michelle de Kretser accepted the 2025 Stella prize on 23 May, the celebrated author shared a warning.“All the time I was writing these words, a voice in my head whispered, ‘You will be punished. You will be smeared with labels as potent and ugly as they’re false,’” De Kretser told the Sydney writers’ festival crowd. “‘Career own goal,’ warned the voice.”Earlier in her prerecorded speech, De Kretser had denounced what she called a “program of suppression” against creatives, scholars and journalists for “expressing anti-genocide views” in relation to Israel and Gaza
‘A giant parenting group’: how online comedians are making a living by laughing about the chaos of kids
Many Instagram-frequenting parents of small children will have seen George Lewis’s sketch about two toddlers discussing their feelings of abandonment and relief wrapped in a game of peekaboo.“It was a normal day, I was just playing with Dad. And then he put his hands in front of his face and he was just gone,” the British comedian and father says in the widely shared video. “He was behaving so erratically.”Life through a two-year-old’s lens – especially in relation to their sleep-deprived parents – is fertile ground for a growing group of online parent comedians whose content is clocking up millions of views
Adam Hills: ‘I knew I should have gone to the King’s birthday but I really wanted to go to rugby training’
Is it true that you turned down an invite to King Charles’s 70th birthday so you could go to rugby training?Yes, that’s 100% true. To be honest, I knew I should have gone to the birthday but I really wanted to go to rugby training. This is ridiculous, but I’d been to Buckingham Palace a couple of times before and I’m at a stage in my life where I thought: “Actually, I’d much rather go to rugby training.” I had started playing disability rugby league and I became quite addicted to it. Training was my favourite part, just hanging out with a bunch of mates playing footy
Andrew Lloyd Webber is ‘hot again’ –with help from new kids on musicals block
When Andrew Lloyd Webber walked on stage to collect the Tony award for best musical revival for Sunset Boulevard, it was the first time in 30 years he had been recognised by the American Theatre Wing.The Jamie Lloyd-directed revival was the star of the show at American theatre’s big night last Sunday with its three wins signifying a return to prominence for the veteran composer.But this wasn’t just about one hit show starring a former Pussycat Doll.Look around theatreland on either side of the Atlantic and Lord Lloyd-Webber’s fingerprints are everywhere: a successful revival of Starlight Express (in the unlikely environs of Wembley); a forthcoming outing for Jesus Christ Superstar; Jamie Lloyd is directing Evita (starring Rachel Zegler) in London, there is a new musical called The Illusionist in the works, and cryptic messages announcing the return of Phantom of the Opera have sprung up around New York.Arguably, we have reached peak Lloyd Webber five decades after his work was first performed on stage
Bank of England keeps interest rates at 4.25% but hints at cuts to come
Recruiter Hays warns global slump in hirings will halve its profits
Shell boss warns of ‘huge impact on trade’ if Israel-Iran conflict escalates
Federal Reserve holds interest rates, defying Trump’s demand to lower them
John Lewis tells some head office staff to work in office at least three days a week
What could Albanese do to improve productivity? Here is a short, non-exhaustive list | Greg Jericho