Fed defies Trump and holds rates, BoE likely to cut – Daily Business

The US Federal Reserve tonight kept US interest rates on hold in defiance of Donald Trump’s call for a cut.

Jerome Powell, the central bank’s chair, warned that the president’s tariffs are likely to be inflationary and weaken growth.

Policymakers chose to leave the benchmark interest rate unchanged in a range of 4.25% to 4.5% for the third consecutive meeting, stating that “uncertainty about the economic outlook has increased further.”

Mr Trump declared that he would fire Mr Powell for not cutting rates, but later backed off and said he had no intention of doing so. Even so, he and Treasury Secretary Scott Bessent have said the Fed should cut rates.

The decision came ahead of the Bank of England’s meeting to decide UK rates, with expectations that the monetary policy committee will shave a quarter point off base rate in response to growth concerns over Mr Trump’s tariffs.

Inflation was also lower than expected in March at 2.6%, down from 2.8% the previous month.

The decision will be announced at 12.02pm, two minutes later than usual because of the two-minute silence to mark VE Day.