Fed leaves interest rates on hold despite Trump pressure

The US Federal Reserve left interest rates on hold yesterday despite mounting pressure from Donald Trump, as the US economy grew at a faster rate than expected in the second quarter of the year.

- Richard Partington Lauren Aratani

Members of the US central bank's rate-setting committee voted to keep borrowing costs unchanged at a range between 4.25 and 4.5%, against a backdrop of intense criticism from Trump, who has repeatedly called on the independent Fed to cut borrowing costs.

Earlier in the day Trump had called again for the Fed to lower borrowing costs, after official figures showed the US economy grew by an annualised rate of 3% in the second quarter, beating Wall Street expectations of 2.4% growth as it recovered from a slump in output in the first quarter.

In a post on his Truth Social platform, the president said: "WAY BETTER THAN EXPECTED! 'Too Late' MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!"

Economists had expected a bounceback from a 0.5% contraction in the first quarter, caused by a surge in imports as US firms scrambled to bring in goods to beat the introduction of Trump's tariffs.