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If one thing has remained constant in President Donald Trump’s first and second terms, it’s his pressure on Federal Reserve Bank Chair Jerome Powell to lower interest rates.
Last July, Trump talked about firing (1) Powell, and the Department of Justice announced plans to launch a criminal investigation into him. A judge blocked (2) the probe (twice), but Powell saw it as direct political pressure to lower interest rates.
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“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a January 2026 statement (3).
But it’s not even that Powell hasn’t lowered rates. Between September 2024 and December 2025, the Fed’s key overnight lending rate fell (4) by 1.75%, with three cuts late last year alone. It now stands (5) at just over 3.6%.
The White House would like to see it lower still. Trump has called (6) for a rate as low as 1%.
Now, Powell and the Federal Reserve staff are grappling with what they consider to be a greater threat than Trump: Inflation.
Beth Hammack, president of the Federal Reserve Bank of Cleveland, told Associated Press about how inflation could force the Fed to raise rates instead of lowering them (6).
“I could see where we might need to raise rates if inflation stays persistently above our target,” she said.
How inflation may force the Fed’s hand on interest rates
The Federal Reserve Bank has a congressional mandate to maintain high employment and low inflation, with a target inflation rate of 2% (7). Inflation fell to 2.4% in January 2026, 0.6% lower than when Trump took office in 2025.
“Inflation has been running above our target for more than five years now,” Hammack told (6) Associated Press.
Now, the Iran war — and its impact on gas prices and global supply chains — is exacerbating the situation. As of late April, gas prices remain above $4 a gallon on average, up 30% due to the Iran war, CNBC reports (8).
A new report (9) from the Organization for Economic Co-operation and Development (OECD) predicts that the U.S. could have 4.2% inflation by the year’s end, the highest in the G7. As of March, America isn’t far off, either. Inflation, as measured by the Bureau of Labor Statistics Consumer Price Index, stood at 3.3% year-over-year (10).
The best lever the Fed has to lower inflation is to raise interest rates. Higher interest rates suppress demand — making it more expensive to get a loan, buy a car or purchase anything on credit. That cools the economy.
Hammock’s Chicago counterpart, Austan Goolsbee, said that if inflation continues to rise while unemployment is low, the Federal Reserve may have to raise interest rates.
“There is an obvious playbook, which is that rate increases have to be on the table,” he told the Associated Press.
Hammock added she would like to see the Fed’s benchmark rate steady “for quite some time.”
That’s because the Fed is walking a tightrope between inflation and employment. High gas prices not only drive inflation, but they can also hurt employment, driving layoffs.
Even as Donald Trump continues urging lower rates, his nominee to lead the Fed, Kevin Warsh, says monetary policy won’t be driven by politics.
“The president never once asked me to commit to any particular interest rate decision, period,” Warsh told the U.S. Senate Banking Committee (11). “Nor would I ever agree to do so if he had. I will be an independent actor if confirmed as chair of the Federal Reserve.”
Some market veterans argue this isn’t the moment to loosen policy. Ray Dalio, founder of Bridgewater Associates, believes cutting rates now could undermine the Fed’s credibility.
“We are certainly in a stagflationary period,” Dalio said in an interview with CNBC (12).
“Certainly, you would not cut interest rates now, you will lose your credibility. The Federal Reserve would lose its credibility, particularly now,” he added.
Read More: Robert Kiyosaki warned of a ‘Greater Depression’ — with millions of Americans going poor. Was he right?
Prepare your finances now
Against this uncertain backdrop, traders are increasingly betting the Fed will hold rates steady. According to the CME Group’s FedWatch tool, markets are currently pricing in a 100% probability that policymakers will leave rates unchanged at their upcoming meeting, with fed fund futures suggesting policy could remain on hold for the rest of the year (12).
With borrowing costs likely to stay elevated for now, it may be a good time to take a closer look at your finances. If you’re carrying high-interest debt — particularly credit cards — rising interest costs could mean more of your monthly payments are going toward interest rather than reducing the balance.
If you have multiple high-interest debts and are struggling to pay them off, consider consolidating your balances into a personal loan through Credible. This way, you’ll only have one monthly fixed payment, making repayment much simpler.
Through Credible’s online marketplace, finding the right loan becomes much simpler. Credible lets you comparison-shop for the lowest interest rates with just a few clicks. In less than three minutes, you’ll see all the lenders willing to help pay off your credit cards or other debts with a single personal loan.
Earn returns on your uninvested cash
There’s one silver lining to higher interest rates — your idle cash can earn meaningful returns through a high-yield account. These accounts typically offer significantly higher rates than traditional checking or savings accounts, allowing your money to grow quietly in the background while remaining easily accessible.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s ten times the national deposit savings rate, according to the FDIC’s March report.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
Lock in rates
While mortgage rates are expected to remain elevated, borrowers still have options to reduce their costs. Shopping around can make a surprisingly big difference.
You could save an average of $80,024 over the life of a mortgage by shopping around and choosing the best rate available, according to LendingTree (13).
Platforms like Mortgage Research Center can help you search for rates offered by reputed lenders near you for free — all from the comfort of your home.
All you have to do is answer some basic questions about your property and your finances (including your annual income and credit score), and Mortgage Research Center will compile a list of the best offers from lenders near you.
You can also get connected with custom mortgage offers from lenders, and set up a free introductory call with no obligation to hire.
Consult a fiduciary
If navigating today’s economic uncertainty feels overwhelming, it may be worth seeking professional guidance.
You can easily connect with a vetted FINRA/SEC-registered financial advisor near you for free through Advisor.com. Every advisor on their network is a fiduciary, meaning they’re legally obligated to act in your best interests.
All you have to do is answer a few questions about your financial situation, and Advisor.com will connect you with a qualified expert.
Even better, Advisor.com lets you set up a free initial consultation with no obligation to hire to see if your match is the right fit for you before making a decision.
— With files from Laura Boast
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
NPR(1); Barron’s(2); Federal Reserve(3); CNN(4); Federal Reserve Bank of New York(5); Associated Press(6); Federal Reserve(7); CNBC(8), (12); OECD(9); Bureau of Labor Statistics (10); AP News (11); LendingTree (13)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
