The Federal Reserve on Wednesday held its interest rate target steady, defying a pressure campaign from by President Donald Trump to lower rates.

After a two-day meeting of its monetary policy committee in Washington, D.C., the Fed announced it would hold its target for short-term interest rates at 4.25% to 4.50%. Investors anticipated the move.

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The Fed’s target rate remains a full percentage point lower than it was when the Fed pivoted to cutting rates last September. But the rate has stayed the same since the start of 2025 and the entirety of Trump’s second term.

The meeting of the Federal Open Market Committee was the third one since Trump imposed sweeping “Liberation Day” tariffs. While the tariffs initially rattled global markets and sparked fears of a recession, the markets have recovered, despite significant lingering uncertainty about global trade.

The Fed is targeting 2% inflation, and broadly speaking inflation has fallen closer to that level, but Fed officials don’t want to start cutting too soon and cause inflation to spike again.

The most closely watched consumer price index ticked up to 2.7% for the year ending in June, a development that may have influenced the monetary policy committee’s decision-making this week.

The central bank has a dual mandate: price stability and maximum employment. So even if inflation were a bit high, the Fed might decide to cut rates if unemployment started rising or there were signs of a recession on the horizon.

For context, the economy again beat expectations in June and added 147,000 jobs, an encouraging sign. The unemployment rate fell slightly to 4.2%, the Bureau of Labor Statistics reported.

Also, economic output has been up. U.S. gross domestic product expanded at a 3% annual rate in the second quarter, the Bureau of Economic Analysis reported on Wednesday morning ahead of the Fed decision. That report is a large change from the first quarter of this year, when GDP fell 0.5%, although the drop was because of a big increase in imports from importers trying to get ahead of Trump’s tariffs.

Trump and his allies have been highly critical of Fed Chairman Jerome Powell, accusing him of mismanaging the central bank and keeping interest rates too high for too long.

The administration has also cast cost overruns of the Fed headquarters renovations as another example of mismanagement, and in an unusual move, Trump visited the headquarters and was given a personal tour by Powell. Trump appears to have left with the impression that Powell will begin to push for lower interest rates.

Powell “said to me very strongly, ‘The country is doing well.’ He said, ‘Congratulations, the country is doing really well,’” Trump told reporters at the White House. “And I got that to mean that I think he’s going to start recommending lower rates.”

The further pause this week will likely further embolden Trump administration officials in their war against Powell.

SHAKY TRUMP-POWELL TRUCE COULD BREAK NEXT WEEK WITH FED RATE DECISION

Bill Pulte, the director of the Federal Housing Finance Agency, has emerged as an attack dog for Trump against Powell. Typically, the director of the FHFA, which has oversight of the government-sponsored enterprises Fannie Mae and Freddie Mac, is not a well known individual. But Pulte has gained significant attention repeatedly bashing Powell to his 3 million followers on X.

The next Fed meeting is set for September, and some economists and investors think a pivot back to cutting could happen at that gathering.