Nick Goold
With U.S. interest rates still high and the economy slowing down, all eyes are on the Federal Reserve. Traders, investors—and even politicians—are asking:
Will the Fed finally cut rates soon, or wait for more signs inflation is falling?
🏦 What Did the Fed Do in June?
At its June 2025 meeting, the Fed decided to keep its key interest rate at 4.25%–4.5%, the same level it’s held for the past four meetings.
This decision was expected. But the Fed’s forecasts gave important clues:
- Most Fed members still expect two rate cuts before the end of 2025
- 7 out of 19 members now expect no cuts at all, up from 4 in March
- Growth is projected at just 1.4% this year, and inflation is at 3%
- The Fed is divided, and uncertainty remains high.
🤔 Why Is the Fed Being Careful?
The Fed is trying to walk a fine line:
- If they cut too soon, inflation could return
- If they wait too long, growth and jobs could suffer
Fed Chair Jerome Powell says the economy still isn’t giving a clear enough signal. Inflation is coming down, but slowly. The Fed is also watching how Trump’s new tariffs and global tensions (especially in the Middle East) could impact the economy. For now, Powell says it’s best to “wait and see.”
🔥 Trump Calls for Deep Cuts—and Attacks Powell
President Donald Trump has made headlines again by demanding dramatic interest rate cuts. He wants the Fed to slash rates by 2.5 percentage points, which would bring the current rate of 4.25–4.5% down to just 1.75–2%.
That would be one of the biggest cuts in modern history—equal to about 10 regular Fed moves (which are usually just 0.25%).
Trump says this move is needed to boost the economy, even if inflation is still above target. He’s also:
- Repeatedly criticized Powell, calling him a “moron”
- Suggested replacing Powell, whose term ends in May 2026
- Even joked about appointing himself to the Fed
Earlier this year, when Trump attacked the Fed, markets dropped. Investors worried about political interference. While Trump wants cheaper money, he also wants to keep markets strong. So if he replaces Powell, it will likely be with someone who supports rate cuts but reassures investors.
⚖️ Behind the Drama, There’s Real Tension Inside the Fed
While Trump is pressuring from the outside, there’s disagreement within the Fed too.
Christopher Waller, a Fed governor appointed by Trump, is calling for a rate cut as soon as next month. He argues that the tariffs haven’t raised inflation much and that the Fed has already waited too long. Waller believes the risk of doing too little is now bigger than the risk of acting too soon.
But Powell and many others still say it’s too early to cut rates. They want more data to confirm that inflation is truly under control and the economy is weakening. The Fed is supposed to be independent of politics, but this growing divide is adding uncertainty to markets.
💡 Why Do U.S. Rates Matter So Much?
The Fed’s interest rate affects nearly everything in the financial world:
- Loan and mortgage rates in the U.S.
- Business investment and job growth
- Currency markets, especially the U.S. dollar and yen
- Prices of stocks, gold, oil, and Bitcoin
When the Fed cuts rates:
- Borrowing gets cheaper
- The dollar often weakens
- Gold and Bitcoin tend to rise
- Stocks—especially in tech and real estate—often rally
But if the Fed holds rates high:
- Inflation may cool further
- Growth could slow, and
- Risk assets may fall
📉 What Could Trigger a Cut?
Fed officials say the main thing they’re watching is unemployment. If more people start losing jobs, the Fed may act quickly.
Other warning signs include:
- Falling inflation below 2%
- Weak consumer spending or retail sales
- A sharp drop in stock markets
- A worsening global crisis (e.g. oil shock or war)
📈 Market Outlook & Trading Tips
For traders, here’s what to focus on:
💴 USD/JPY
The dollar remains strong against the yen as the Fed stays hawkish
USD/JPY broke above 146 last week
If a cut becomes likely, the dollar could weaken—USD/JPY may fall back below 144
🪙 Gold and Bitcoin
Gold is holding up amid Middle East tensions
Bitcoin fell to $100,000 on fear but bounced quickly
Both could climb if rate cuts seem more likely or if global risks rise
📉Stocks
The Dow Jones is stuck near 43,000 resistance
If cuts are delayed, stocks may struggle
But any dovish Fed signal could trigger a rally
📅 This Week’s Key Events
Tuesday: Powell testifies before Congress
Friday: U.S. Core PCE inflation
✅ A Cut Is Coming—but Not Yet
The Fed is staying patient, even with Trump pressuring loudly.Rate cuts are likely in autumn 2025, especially if unemployment ticks higher or inflation keeps cooling. But the Fed won’t move just because of politics.
Expect Powell to hold the line—for now. But with Trump demanding a 2.5-point cut, internal voices like Waller pushing for action, and Powell’s term ending in 2026, the Fed could look very different by next year.
