{"id":2018,"date":"2025-07-31T08:54:38","date_gmt":"2025-07-31T08:54:38","guid":{"rendered":"http:\/\/ft365.org\/index.php\/2025\/07\/31\/fed-holds-interest-rates-steady-resisting-pressure-from-trump-bankrate\/"},"modified":"2025-07-31T08:54:38","modified_gmt":"2025-07-31T08:54:38","slug":"fed-holds-interest-rates-steady-resisting-pressure-from-trump-bankrate","status":"publish","type":"post","link":"http:\/\/ft365.org\/index.php\/2025\/07\/31\/fed-holds-interest-rates-steady-resisting-pressure-from-trump-bankrate\/","title":{"rendered":"Fed Holds Interest Rates Steady, Resisting Pressure From Trump | Bankrate"},"content":{"rendered":"
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The Federal Reserve left interest rates unchanged for a fifth straight meeting, with policymakers stuck in a prolonged wait-and-see mode as President Donald Trump\u2019s tariffs leave them wary of cutting borrowing costs too soon.<\/p>\n

The decision means the key interest rates that Americans pay to finance anything from a car to a home renovation will stay steady. Meanwhile, savers who\u2019ve parked their cash in a high-yield savings account will continue benefiting from inflation-beating returns \u2014 and yields holding at levels previously not seen for over a decade.<\/p>\n

Behind the decision, however, is a growing divide over how the Fed should steer the economy. For the first time since 1993, two Fed governors dissented against the rest of the Federal Open Market Committee (FOMC), preferring to cut borrowing costs by a quarter of a percentage point.\u00a0<\/p>\n

Those disagreements come as Trump unleashes an unprecedented amount of public pressure on Fed Chair Jerome Powell to cut rates. Trump has said the chief central banker is \u201ctoo late\u201d to adjust policy, is preventing the economy from booming and is adding to the U.S. government\u2019s own cost of borrowing money. He reportedly discussed firing Powell before his term ends in May 2026 with Republican lawmakers.\u00a0<\/p>\n

\u201cThis will only add to the scrutiny and second-guessing of anything the Jerome Powell-led Federal Reserve says, does or doesn\u2019t do,\u201d said Greg McBride, CFA, Bankrate chief financial analyst.\u00a0<\/p>\n

Consumer borrowing costs are a little bit lower than they were at this time a year ago, after the U.S. central bank lowered interest rates a full percentage point across a series of cuts in late 2024. Yet, the U.S. central bank\u2019s key rate has been frozen since January, with officials paralyzed by rising economic uncertainty.\u00a0<\/p>\n

A top concern is Trump\u2019s ongoing global trade war, which brought tariff rates on key trading partners to the highest level since the Great Depression. Economists warn that those tariffs could result in higher prices across store shelves, but they may also weaken economic growth and make production more expensive.\u00a0<\/p>\n

So far, inflation has shown up first. After coming within an earshot of the Fed\u2019s 2 percent target earlier this year, price pressures are now picking up again. Inflation rose 2.7 percent from a year ago, according to the latest data from the Bureau of Labor Statistics, and many prices on items that are typically imported popped.\u00a0<\/p>\n

Even so, price increases haven\u2019t been as drastic as economists initially feared \u2014 but that depends on where tariff rates end up. Helping keep a lid on inflation, Trump reduced or postponed many of the harshest tariff hikes that he announced on \u201cLiberation Day\u201d in early April, but a key Aug. 1 deadline is approaching.\u00a0<\/p>\n

Trump has said that any country that doesn\u2019t strike a deal with the U.S. could face tariff rates between 15-20 percent, and he\u2019s threatened a steeper 50 percent levy on goods from Brazil. The higher the tariff rate, the harder it becomes for businesses to absorb some of those higher costs. The products that businesses stocked up on before tariffs went into effect also won\u2019t last forever.\u00a0<\/p>\n

Powell has highlighted that someone along the supply chain \u2014 whether it\u2019s the importer, the exporter, the retailer or the consumer \u2014 will end up footing the bill. Right now, they just don\u2019t know who.\u00a0<\/p>\n

\u201cThey may be less than people estimate or more than people estimate. They\u2019re not going to be zero,\u201d Powell told reporters at the Fed\u2019s post-meeting press conference. \u201cConsumers will pay some of this. Businesses will pay some of this. Retailers will pay some of this. We\u2019re just going to have to see it through.\u201d<\/p>\n

If businesses end up eating those costs, one risk is that they might start to cut back on hiring \u2014 or reduce headcount altogether. Already feeling the pain of elevated post-pandemic inflation, consumers could also start to pull back on spending.\u00a0<\/p>\n

Policymakers have implied that those effects could actually offset higher inflation, weakening the economy. It\u2019s part of the reason policymakers still continued penciling in a median of two cuts for 2025, despite simultaneously expecting higher inflation. Some Fed officials have also indicated that they don\u2019t want to wait too long to watch what happens with inflation because high rates alone raise the risk of a recession.\u00a0<\/p>\n

Powell said the Fed hasn\u2019t made any decisions on when it could next cut rates and that they\u2019ll want to keep an eye on incoming data. Previously, investors had predominantly expected the next rate cut to occur in September, according to CME Group\u2019s FedWatch tool.\u00a0\u00a0<\/p>\n

\u201cInterest rates are high and are unlikely to come down quickly,\u201d McBride says. \u201cConsumers should lean into this by aggressively paying down high-cost debt and padding emergency savings. Those with less debt and more savings will be best positioned to weather whatever the economy throws at us in the months ahead.\u201d<\/p>\n

Wondering what to make of the Fed\u2019s latest announcement? Here\u2019s a breakdown of what it means for every aspect of your personal finances.<\/p>\n

The Fed\u2019s interest rate decision: What it means for you<\/h2>\n

Savers<\/h3>\n

Savers are among the biggest winners in today\u2019s high-rate environment. Yields on savings accounts and certificates of deposit (CDs) are unlikely to budge much as the Fed keeps rates steady.<\/p>\n

That can help Americans grow their savings at a time when they may need it most. Recession risks are elevated, yet less than half (or 46 percent) of Americans have enough savings to cover three months\u2019 worth of expenses, according to Bankrate\u2019s latest Emergency Savings Report. Experts typically recommend keeping enough cash on hand to cover at least six months\u2019 worth of expenses.<\/p>\n

Unless you\u2019ve locked in your cash in a CD, though, banks could adjust their offerings at any time. Yields may restart their descent if the Fed begins strongly signaling that they\u2019re about to start cutting rates again.\u00a0<\/p>\n

Even if yields start to drift lower, most important for savers will be whether yields remain higher than the current rate of inflation. Savers are most likely to earn a \u201cpositive\u201d return in a high-yield savings account, where yields currently stand at 4 percent or more. That\u2019s almost eight times higher than the national average savings rate of 0.48 percent, which is weighed down by traditional brick-and-mortar banks that pay near-zero percent in interest.\u00a0<\/p>\n

Borrowers<\/h3>\n

If there\u2019s any clear loser from today\u2019s high-rate era, though, it\u2019s borrowers. Americans with credit card debt are still facing higher interest rates than at any point before the pandemic \u2014 even after the Fed has started cutting rates. Meanwhile, Americans who\u2019ve had to make a big-ticket purchase have been forced to borrow during one of the most expensive periods in over a decade.\u00a0<\/p>\n

Here\u2019s a snapshot of the current borrowing landscape and how high key consumer borrowing rates remain as the Fed continues to keep rate cuts on hold:\u00a0<\/p>\n