The Federal Reserve is expected to keep interest rates unchanged at this week’s policy meeting, despite pressure from Trump, according to Reuters. At least one or two governors may dissent, advocating for a rate cut. Most Fed officials are more concerned that Trump's tariffs could reverse inflation progress than they are about labor market weakness. Recent trade developments with Japan and the EU suggest overall tariffs may remain below the steep levels Trump announced on April 2nd. U.S. tariffs are at a 90-year high, contributing to rising consumer prices and pushing inflation to a 3.5% annualized rate in June. Policymakers worry that rapidly rising prices could alarm households and spark a broader inflationary spiral, according to Fed President Austan Goolsbee. Trump’s broader economic policies, such as tax cuts and deregulation, have led to differing views within the Fed’s policy-setting committee.
