The Federal Reserve just hit pause again. For the fourth straight time, the FED left its benchmark interest rate unchanged, holding steady at 4.25% to 4.5%. Jerome Powell and his team didn’t surprise markets with this move—but their message carried weight. They now expect the US economy to grow only 1.4% this year, down from the earlier 1.7% forecast. Inflation, too, is running hotter than expected, with core PCE now projected at 3.1% for 2025.

This lower GDP forecast suggests the economy is cooling, but not enough to trigger immediate cuts. Powell hinted that while uncertainty has dropped slightly, it still clouds the outlook. The FED remains cautious, especially with global tensions and Trump-era policies potentially pressuring prices. Still, the expectation stands: two rate cuts could come before the end of the year.

Trump vs. Powell: Pressure Builds at the Top

Donald Trump isn’t hiding his frustration. The former president has taken aim at Jerome Powell, blaming him for acting “too late” and resisting the rate cuts Trump wants. Trump argues that inflation is already under control and says the FED is missing a golden opportunity to boost the US economy. He even joked that he might run the FED himself—just to get things done.

But Powell and many other FED officials aren’t so quick to move. They’re still eyeing Trump’s tariffs and tax policies as possible inflation triggers. Despite some recent price relief, the FED isn’t buying the idea that inflation is gone. The 2% inflation target remains unmet, and Powell has made clear that until that happens, rate cuts must be carefully timed. The clash between Trump and the FED could intensify as elections draw near.

Inside the FED: Divided Views on Rate Cut Timing

Look closely at the latest “dot plot,” and you’ll see a split FED. While the headline message is two rate cuts this year, the internal forecasts reveal a fractured committee. Seven members see no cuts at all in 2025. Two others predict only one. Meanwhile, eight policymakers expect exactly two, and just a few think more than that might be necessary.

This divide reflects deeper uncertainty about the US economy’s path. Growth is slow. Inflation is sticky. Unemployment could tick up. The FED’s dual mandate—stable prices and maximum employment—is in conflict. That’s why Powell is treading so carefully. One wrong move could tip the US into stagflation. For now, the message is: wait, watch, and maybe cut later.

FED Balances Risks as Trump-Era Policies Loom

What’s really holding the FED back? One answer is policy risk. Trump’s past and possibly future plans—tariffs, tax cuts, immigration changes—create waves that ripple through inflation models. Powell and the FOMC aren’t just fighting today’s numbers; they’re bracing for what could come next. That’s why they removed mentions of rising inflation and unemployment from their latest statement but kept their tone cautious.

They see inflation as “somewhat elevated” and GDP growth weakening. In short, the US economy is slowing, but not enough to spark immediate action. Until the data shifts clearly in one direction, expect the FED to keep playing defense.

What’s Next for the US Economy and FED Policy?

The second half of 2025 will be critical. With four FOMC meetings left this year, markets are watching closely. If inflation starts cooling and GDP continues to lag, Powell might finally make a move. But don’t count on it in July. The FED wants more evidence. Until then, crypto traders, equity markets, and even politicians like Trump will have to wait.

Bottom line? The FED isn’t rushing. Rate cuts are still on the table, but Jerome Powell is playing it safe—for now.