Federal Reserve Chairman Jerome Powell has been under pressure from President Trump to lower interest rates.
There’s an unusual air of suspense surrounding the Federal Reserve’s policy meeting Wednesday, with the possibility that the central bank could cut interest rates for the first time in nearly 11 years.
Most forecasters are not expecting an immediate rate cut. But there’s less certainty than usual, amid signs of a slowing U.S. economy and growing political pressure from the White House to cut rates.
Policymakers have been getting mixed signals in recent weeks about the strength of the economy. A surprisingly weak jobs report — showing just 75,000 jobs added in May — was followed by better-than-expected numbers on retail sales.
Oddsmakers generally think Fed Chairman Jerome Powell and his colleagues will maintain their wait-and-see approach Wednesday, hoping for more clear information before their next rate-setting meeting in late July.
Trade tensions continue to be a wild card. Since the Fed’s last meeting in early May, the Trump administration has raised tariffs on $200 billion in Chinese imports, and threatened to impose new tariffs on an additional $300 billion in goods from China.
The stock market rallied on Tuesday, after Trump tweeted that he had “a very good telephone conversation” with Chinese President Xi Jinping, suggesting a possible thaw in trade relations. The two men are expected to hold an “extended meeting” next week on the sidelines of the G-20 summit in Japan.
Trump has repeatedly urged the Fed to reduce interest rates, complaining that the central bank slowed economic growth by raising rates last year.
Bloomberg reported Tuesday that the president explored the idea of removing Powell as Fed chairman earlier this year.
“Let’s see what he does,” Trump told reporters Tuesday when asked about that report.
Earlier, Trump had complained that the European Central Bank has signaled a willingness to stimulate a slowing economy.
“I want to be given a level playing field. And so far, I haven’t been,” Trump said.
House Speaker Nancy Pelosi told reporters the president should not interfere with the central bank’s policymakers.
“The last thing we need is politics involved in setting interest rates,” Pelosi said Wednesday at a breakfast sponsored by The Christian Science Monitor. “The last thing we need is a president threatening a chairman of the Fed about whether he is raising or lowering rates in tune with the president’s politics. This is so very, very wrong.”