The U.S. Federal Reserve is widely expected to hold interest rates steady at its policy meeting on Wednesday, as signs of easing inflation and continued job growth clash with increasing pressure from President Donald Trump to slash rates amid the first economic contraction in three years.
Trump has intensified his public attacks on Fed Chair Jerome Powell, blaming him for failing to act swiftly as economic risks mount. The president’s criticism has grown louder following recent data showing a 0.3% year-on-year GDP contraction in the first quarter and signs of weakening labor market momentum.
Despite mounting political pressure, analysts expect the Fed to keep the federal funds rate unchanged at 4.25%–4.5%, emphasizing a cautious approach as it weighs mixed economic indicators.
Inflation data released by the U.S. Labor Department showed the Consumer Price Index (CPI) declined 0.1% in March, the first monthly drop since May 2020, bringing annual inflation down to 2.4%, the lowest since September 2024. The Producer Price Index (PPI) also fell by 0.4% month-on-month in March, with a 12-month increase of 2.7%. The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, remained flat monthly and eased to 2.6% annually, down from 3% in February.
While inflation cools, the economy showed signs of slowing. The trade deficit reached a record $162 billion in March, driven by a surge in imports that weighed on domestic output. Labor data painted a mixed picture. Non-farm payrolls rose by 177,000 in April, slightly above expectations, but private-sector hiring disappointed, rising just 62,000. The unemployment rate held steady at 4.2%, while initial jobless claims rose to 241,000, the highest in nine weeks.
In response to these developments, Trump ramped up his criticism of Powell. On April 7, he wrote on social media: “Now is a PERFECT time to cut rates,” accusing Powell of being “always late.” On April 17, he added: “Jerome Powell of the Fed, who is always TOO LATE AND WRONG… issued a report which was another, and typical, complete ‘mess!’” Days later, he claimed Powell’s actions could trigger a deeper slowdown.
Although markets were rattled by the escalating tension, Trump softened his tone on April 23, denying any plans to remove Powell despite calling him a “major loser” earlier. Nevertheless, he renewed calls for rate cuts following the release of April’s labor data.
The Federal Reserve, meanwhile, has signaled that while inflation is moving toward its 2% target, the labor market’s underlying strength and geopolitical uncertainties argue for caution. The central bank’s statement on Wednesday is expected to acknowledge recent progress on inflation but stop short of signaling any imminent rate cuts.
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Houthi attacks target Riyadh amid concerns over Saudi oil supplies, as Iran says it will not reopen the Strait of Hormuz until its conditions are met and U.S. commitments are implemented, parliament speaker Mohammad Bagher Ghalibaf said on Sunday.
The U.S. State Department approved a $2.7 billion military sale to Ukraine for air-defence development upgrades, along with related equipment and services, the department said. Meanwhile, Ukrainian authorities reported at least 10 people had died in Russian attacks over the last 24 hours.
The death toll from an overnight Russian attack on the Kyiv region rose to four, including three children, Kyiv regional authorities said on Sunday. A mother and her two 3-year-old children were killed when a Russian drone strike hit a private home, the emergency service said.
Russian authorities have reported attacks on voting systems and communication lines as the country’s parliamentary election entered its second day on Saturday (19 September).
The far-right Alternative for Germany (AfD) took first place in state elections in northeastern Germany on Sunday, voting projections showed, delivering the worst result for Chancellor Friedrich Merz's mainstream conservative party since 1949.
The Left Party won Sunday's Berlin state election with 25.5 per cent of the vote in the preliminary result, ahead of the Christian Democrats (CDU) on 19.1 per cent. This marks a major shift in the city's political landscape and a setback for Chancellor Friedrich Merz's ruling coalition.
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Overnight Russian strikes on the city of Sumy, northeast Ukraine, have killed one woman and injured a man, the country's State Emergency Service has said.
The administration of U.S. President Donald Trump has prepared sanctions targeting the entire International Criminal Court (ICC) and could announce them soon, escalating Washington's efforts to pressure the global tribunal.
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