The following is a report from the Associated Press.
The Federal Reserve is expected to leave its short-term interest rate unchanged on Wednesday for the fifth straight meeting, a move that will likely underscore the deep divide between how Chair Jerome Powell and his chief critic, President Donald Trump, see the economy.
The Fed itself, to be sure, is increasingly divided over its next steps, and many economists expect that two members of the Fed’s governing board — both appointed by Trump — could dissent on Wednesday in favor of cutting rates. If so, that would be the first time two governors vote against the chair since 1993.
Even so, the gap between the views of the Fed’s interest-rate setting committee, chaired by Powell, and the White House is unusually large. In several areas, Trump’s views sharply contrast with that of the Fed’s leadership, setting up likely clashes for years to come, even after Powell’s term as chair ends in May 2026.
For example, Trump says that because the U.S. economy is doing well, the Fed should cut rates, as if the U.S. is a blue-chip company that should pay less to borrow than a risky start-up.
But Fed officials — and nearly all economists — see it the other way: A solid economy means rates should be relatively high, to prevent overheating and a burst of inflation.
“I’d argue that our interest rates are higher because our economy’s doing fairly well, not in spite of it,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities.
Trump argues that the Fed in general and Powell in particular are costing U.S. taxpayers hundreds of billions of dollars in interest payments by not reducing borrowing costs. Yet Fed officials don’t think it’s their job to reduce rates the government pays on Treasury notes and bonds.
Most economists worry that if they did, they would risk failing at one of the key jobs Congress gave them: fighting inflation.
