US Fed policy outlook: Fed chair Jerome Powell says central bank must remain ‘non-political’ as Donald Trump pressure mounts, rate cut still not ruled out

US Federal Reserve Chair Jerome Powell on Tuesday stressed the importance of political neutrality for the central bank, amid renewed pressure from President Donald Trump, who has criticised the Fed for not cutting interest rates more aggressively this year.Speaking at a central banking conference in Sintra, Portugal, hosted by the European Central Bank, Powell said: “We’re trying to deliver macro stability, financial stability, economic stability, for the benefit of all the people. If we’re going to do that successfully, we need to do it in a completely non-political way.”According to AFP, the comments came as Trump continues to push the Fed to lower its key rate, arguing that rate cuts would help reduce interest costs on federal debt and support economic growth. Powell, however, reaffirmed the Fed’s decision to keep rates on hold at around 4.3% while assessing the inflationary impact of the president’s sweeping tariffs.“As long as the economy is in solid shape, we think the prudent thing to do is to wait and see what those effects might be,” Powell said, quoted AP. The Fed, which cut interest rates three times in 2024, has kept policy steady in 2025 amid growing uncertainty over trade policy.Powell noted that inflation is likely to pick up later this summer, but said the timing and size of the increase due to Trump’s tariffs remain unclear. Despite maintaining a cautious stance, Powell did not rule out a rate cut at the upcoming July 29–30 policy meeting.“I wouldn't take any meeting off the table or put it directly on the table,” he said.Trump, who has repeatedly criticised Powell in public, renewed his attacks on Monday — this time expanding his criticism to include the entire Federal Reserve Board. “The board just sits there and watches, so they are equally to blame,” Trump said, escalating pressure on Fed officials like Governor Chris Waller, a Trump appointee who is viewed as a potential successor to Powell when his term ends in May 2026.In June, Powell had signalled that the Fed would “learn a great deal more over the summer” about the inflationary impact of tariffs — a message widely interpreted as a sign that any rate cut would likely be delayed until September. But in recent days, two Trump-appointed Fed governors, Waller and Michelle Bowman, said they do not expect tariffs to cause persistent inflation and suggested they may support a rate cut in July.Powell also acknowledged that without the tariffs, the Fed would probably be cutting rates already, but the uncertainty has forced policymakers to pause.Despite Trump’s criticism, markets have so far shrugged off concerns about central bank independence, especially after the US Supreme Court ruled that the president cannot fire the Fed chair, reinforcing the institution’s political insulation.