The Federal Reserve is expected to announce on Wednesday that it will keep interest rates unchanged. This decision comes amid ongoing pressure from President Donald Trump, who has been vocal about his desire for a rate cut. Investors largely anticipate that the central bank will maintain its benchmark rate between 4.25% and 4.5%, according to the CME FedWatch Tool, which tracks market sentiment.

Trump has criticized Federal Reserve Chair Jerome Powell and other officials for not acting more decisively to lower rates. He has even referred to Powell as "Too Late" for his reluctance to make cuts. The president's recent visit to the Fed included complaints about the costs associated with a $2.5 billion renovation of two Fed office buildings in Washington. During the visit, Trump claimed the renovation costs exceeded $3 billion, a statement Powell corrected by clarifying that the higher figure included a third building that had already been completed.

Since cutting rates by a full percentage point last year, the Fed has adopted a cautious approach, waiting to assess the impact of Trump's tariffs and other economic policies. Powell has stated that personal attacks from Trump have not influenced his decision-making. "I'm very focused on just doing my job," Powell said at a recent central bankers' meeting in Portugal. He emphasized his goal of leaving the economy in good shape for his successor, as his term as chair is set to expire in May 2026.

Inflation remains a concern for the Fed, as it is currently above the central bank's target of 2%. Consumer prices rose 2.7% in June compared to the previous year, a larger increase than in May. Despite this, unemployment rates remain low, which reduces the urgency for immediate rate cuts. The Labor Department is expected to release data on job gains for July on Friday.

Some Fed officials are advocating for a rate cut sooner rather than later. Fed Governor Chris Waller has expressed concerns that while Trump's tariffs may lead to a temporary increase in prices, they are unlikely to cause persistent inflation. He also noted that the job market might be weaker than the current low unemployment rate of 4.1% suggests. "We should not wait until the labor market deteriorates before we cut," Waller stated in New York this month.

Fed Governor Michelle Bowman has also indicated her openness to a rate cut at the upcoming meeting. While some members of the Fed's rate-setting committee prefer a more cautious approach, many believe that rate cuts could be appropriate later this year, according to the minutes from the most recent Fed meeting.