The Fed Was Right to Say No on Interest Rates

The Federal Reserve resisted pressure from the White House last week and left its policy rate unchanged. It was the right decision. As Chair Jerome Powell acknowledged, the case for a cut was a bit stronger this time than in June — and two of the Fed’s policymakers, in rare dissents, voted to lower the rate by a quarter-point. For now, though, patience in relaxing the central bank’s “modestly restrictive” stance still makes sense.

As Powell explained, the Fed is grappling with conflicting information and heightened uncertainty. Economic growth has slowed in recent months, the pace of hiring has cooled and data published after the Fed’s decision showed that the unemployment rate edged up in July. Even so, inflation continues to run faster than the bank’s 2% target (core inflation was 2.8% in the year to June), it’s too soon to say how much the administration’s new tariffs will push up prices, and last month’s jobless rate of 4.2% still squares with policymakers’ “maximum employment” mandate.