Jornal Do Brasilia - US Fed keeps interest rates unchanged in face of Trump criticism

The Fed kept the benchmark lending rate at a range between 4.25 percent and 4.50 percent at the end of its two-day meeting, with officials penciling in two rate cuts this year, similar to earlier projections.

The move is likely to draw the ire of Trump, who has repeatedly pressured the independent central bank for rate reductions, and on Wednesday called Fed Chair Jerome Powell "stupid" for not lowering rates more quickly.

"We have a stupid person, frankly, at the Fed," Trump said in reference to Powell, hours before it was due to release its policy decision.

"We have no inflation, we have only success, and I'd like to see interest rates get down," he added, speaking at the White House. "Maybe I should go to the Fed. Am I allowed to appoint myself?"

The Fed said in a statement that "uncertainty about the economic outlook has diminished but remains elevated."

The central bank also cut its expectations for economic growth this year and raised its inflation and unemployment forecasts in updated projections.

Powell is due to address reporters at 2:30pm (1830 GMT).

The Fed's decision was in line with analysts' expectations, with observers largely expecting policymakers to adopt a wait-and-see approach as they monitor the effects of Trump's broad tariffs on the world's biggest economy.

Trump on Wednesday insisted there was no need to worry about price increases.

While the president has imposed a 10 percent tariff on most US trading partners and steeper levies on imports of steel, aluminum and autos in recent months, these have not triggered widespread price surges so far.

This is partly because Trump has backed off or postponed some of his most punishing salvos, while businesses are relying on existing inventory to avoid hiking consumer costs directly.

But economists expect it will take several months for tariffs to flow into consumer prices, and the Federal Reserve is proceeding cautiously with interest rate adjustments.

On Wednesday, it cut its expectations for 2025 economic growth to 1.4 percent from its March projection of 1.7 percent.

It also raised its inflation forecast to 3.0 percent and that of the unemployment rate to 4.5 percent.

While officials penciled in two rate cuts this year, more participants than before in its rate-setting committee were inclined towards keeping rates unchanged in 2025.

- 'Saber-rattling' -

"The Fed would no doubt be cutting again by now if not for the uncertainty regarding tariffs and a recent escalation of tensions in the Middle East," said KPMG senior economist Benjamin Shoesmith.

He added that officials will want to see if price increases are sticky.

Trump has been urging the independent central bank to slash rates, calling Powell "too late" in doing so and "a fool" for holding off further cuts at the bank's May meeting.

The president has pointed to benign US inflation in arguing for cuts.

More recently, he cast such a move as a way for the country to "pay much less interest on debt coming due," overlooking the fact that lower interest rates usually raise consumer prices.

Powell has maintained that the Fed's rate-setting committee would make its decisions based solely on objective and non-political analysis, the Fed previously said.

The Fed chair has also defended US central bank independence over rates in his recent meeting with Trump.

Despite Trump's pressure, Allianz Trade North America senior economist Dan North expects Powell will not be too shaken by "saber-rattling."

"Consumers are still spending, labor markets still creating jobs, although it is in fact slowing a little bit," North told AFP. "The health of the economy doesn't beg for the Fed to cut rates."

S. dos Reis--JDB