President Donald Trump criticized the Federal Reserve’s handling of inflation and banking regulation on Wednesday, following the central bank’s decision to hold interest rates steady at 4.25%-4.5%.

What Happened: In a Truth Social post, Trump pledged to combat inflation through expanded energy production and regulatory cuts if elected, while denouncing the Fed’s focus on climate initiatives and diversity programs.

His comments came just hours after the Federal Open Market Committee maintained rates and ended its streak of three consecutive cuts that began in September.

“The Fed has done a terrible job on Bank Regulation,” Trump wrote, promising that his administration would “unleash lending for all American people and businesses” through Treasury-led regulatory reforms.

The Fed’s latest policy statement noted that while inflation has moved closer to its 2% target, it “remains somewhat elevated.” This marks a slight shift from December’s more optimistic tone about inflation progress, according to multiple economists.

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Why It Matters: Bill Adams, chief economist for Comerica Bank, suggested the Fed’s cautious stance might reflect concerns about potential inflationary pressures from proposed Trump administration policies, including higher tariffs and stricter immigration controls.

Markets showed mixed reactions to the Fed’s announcement. The SPDR S&P 500 ETF Trust (NYSE:SPY) traded near flat, while the U.S. dollar index strengthened modestly. Treasury yields edged higher, with the policy-sensitive two-year yield rising 3 basis points to 4.24%.

Fed Chair Jerome Powell sidestepped questions about Trump’s criticism during his press conference, stating “It’s not appropriate for me to comment on what the president said.” Powell emphasized that the Fed isn’t rushing to adjust rates, noting that recent inflation readings have shown encouraging progress.

Market expectations for future rate cuts have shifted, with investors now pricing in a 30% probability of a March cut, rising to 45% for June. Joseph Brusuelas, RSM‘s chief economist, projects two quarter-point cuts this year, likely in June and December, though he emphasized these moves would depend heavily on incoming economic data.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.