Fed Holds Rates Steady Ignoring Trump’s Calls to Lower Them. S&P 500 Erases Daily Gains

Central bank officials flagged growing risks of higher inflation and elevated unemployment as they stayed their hand from tweaking borrowing costs for the third straight time.

🧊 Fed Freezes Rates Again

• The Federal Reserve kept interest rates USINTR unchanged on Wednesday, holding its key benchmark at the 4.25%–4.50% range for the third straight meeting, even as pressure mounted from President Donald Trump to slash borrowing costs.
• Wall Street, most likely hopeful for a surprise policy shift, reversed course shortly after the announcement, with the S&P 500 slipping 0.3% and the Nasdaq falling 0.5%. The Dow clung to a modest 200-point gain, buoyed by Disney’s earnings-driven rally.

🔎 Tariffs, Inflation, and Uncertainty

• The Fed’s statement delivered a clear message: buckle up. Officials flagged a jump in “uncertainty about the economic outlook,” pointing directly at the inflationary effects of Trump’s escalating tariff regime and its growing threat to employment.
• “The risks of higher unemployment and higher inflation have risen,” the FOMC warned, underscoring why rate cuts remain off the table — for now.

💪 Fed Holds the Line

• This comes as Trump continues to hammer Fed Chair Jay Powell for what he calls “too slow” policy moves, even calling him a “Major Loser” on social media.
• Despite the rhetoric, the Fed is holding its line, emphasizing it needs more time to assess the impact of trade disruptions and price pressures.

💫 Markets Wanted a Nod — Got a Shrug

• While a rate cut wasn’t expected this meeting, markets were clearly hoping for at least a dovish wink. Instead, Powell’s press conference leaned cautious — “we’re not in a hurry.”
• With inflation still sticky and job market strength under threat, the central bank isn’t eager to loosen policy just yet.