Fed’s Powell is about to defy Trump and hold rates steady

Things are getting awkward for the Federal Reserve.

With their eye on inflation, officials are inclined to hold rates steady when they meet in Washington on Tuesday and Wednesday. But fears of a slowdown are mounting, and President Donald Trump and some of his deputies keep hammering the central bank for an interest-rate cut.

Caught in that bind, Fed Chair Jerome Powell may have been comforted by government data on Friday showing a healthy 177,000 jump in April payrolls. As long as the labor market holds firm, the Fed can more easily justify standing pat.

Meanwhile, the Fed’s favored inflation gauge showed price pressures continued to slowly ease. While Powell & Co. would typically welcome such a cooling, higher US duties on imports risk upending the progress they’ve made on inflation.

Indeed, uncertainty is the dominant factor now for major central banks around the world. The White House is pursuing deals on the tariff front that could once again shift the landscape, a nightmare for anyone trying to forecast future economic conditions.

“We expect Powell to push back against market pricing and signal a renewed priority on price stability. Officials like Richmond Fed President Thomas Barkin and Fed Governor Adriana Kugler have voiced concerns that inflation expectations may be loosening. Add to that the solid April payroll print and there’s little pressure for a near-term cut.”

— Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins, economists.