Following a series of cuts to the federal funds rate in late 2024, the Federal Reserve has since held its target rate steady despite pressure to make additional cuts in 2025.

Fed officials are adopting a cautious approach amid economic uncertainties, especially the impact of recent tariffs imposed by the Trump administration. They've emphasized the need for patience, suggesting that any rate changes should await clearer economic data.

However, President Trump has been vocal in his opposition to the Fed's decisions, to say the least. He described Fed Chair Jerome Powell as a "stubborn moron" after the Fed kept interest rates steady, urging for immediate cuts and suggesting the Fed board override Powell.

And on Monday, Trump took things even further, stating in a letter (which was subsequently shared on social media) that he removed Federal Reserve Governor Lisa Cook from her post — a move that critics say is illegal.

So, how much influence does the sitting president really have over Fed leadership and its monetary policy decisions? Here’s what you need to know.

Read more: 5 ways to tariff-proof your finances

The Federal Reserve doesn’t directly control interest rates set by individual financial institutions. The Federal Open Market Committee (FOMC) — the division of the Fed responsible for setting monetary policy — controls the federal funds rate. That’s the short-term interest rate that depository institutions charge each other to borrow money overnight.

Learn more: Federal funds rate: What it is and how it affects you

When the FOMC raises or lowers its target rate, banks typically follow suit. Rising rates generally make it more expensive for consumers to borrow money, but it also means they’ll earn higher rates on savings accounts, certificates of deposit (CDs), and money market accounts. Conversely, lowering rates decreases short-term interest rates on credit products and deposit accounts.

Here’s a look at how rates have changed since 2022:

U.S. presidents don’t have authority over the Fed, but they do have certain powers that can impact the future of the Fed and its decisions.

The chair of the Board of Governors of the Federal Reserve System leads the Fed in working toward its key goals, including maximum employment, stable prices, and moderate long-term interest rates. Some of the Fed chair’s responsibilities include reporting to Congress on the Fed's monetary policy objectives, testifying before Congress, and meeting periodically with the Treasury Secretary.

According to the Federal Reserve Act, the chair and vice chair of the board are appointed by the president but must be confirmed by the Senate. Fed chairs and vice chairs serve four-year terms and can be reappointed by the sitting president. They can also be ousted by a sitting president, although this has never happened.

The president also nominates the seven members of the Board of Governors who serve on the FOMC and oversee the 12 Reserve Banks. Each member is appointed for up to 14 years, which is considered a full term, after which they can’t be reappointed.

Again, the president also has the ability to remove a governor from their seat. According to the Federal Reserve Act, governors can be removed by the President “for cause,” which is generally understood to mean serious misconduct or inability to perform the job — not simply policy disagreements. Until now, no Fed governor has been removed by a president.

In his letter, Trump accused Cook of mortgage fraud, citing this as justification for firing her. The matter was referred to the Justice Department for investigation, though Cook has not been officially charged with any crime.

In a statement released by her attorney, Abbe Lowell, Cook said she would not step down, explaining that President Trump does not have cause and therefore, no authority to remove her. Lowell said Tuesday they would be filing a lawsuit to challenge what they called an "illegal action."

Though presidents can’t control interest rates directly, they can discuss their stance on current monetary policy and its impact on rates. But this can be a touchy topic.

“Institutionally, the Federal Reserve is very protective of its independence because that independence helps it achieve its mandate,” said Scott Fulford, a senior economist at the Consumer Financial Protection Bureau. “Most presidential administrations go out of their way to avoid even publicly commenting on Fed policy.”

Even so, that hasn’t stopped our current president from expressing his views on the Fed and its decisions.

For example, earlier this year, Trump posted on social media that Powell's termination as Fed chair "cannot come fast enough" and referred to him as "a major loser."

Experts maintain that the Fed will continue to make decisions independently. Still, this outside commentary can lead to campaign promises and political actions that impact inflation and consumer prices in other ways, according to Fulford.

“For example, this administration has focused on resolving supply chain problems and reducing monopoly rent-seeking, which reduces inflation,” Fulford said. “Congress could raise taxes or spend less, which would also affect inflation.” He added that there are many policies that affect the broader cost of borrowing as well, such as reducing late fees or closing costs.

Bottom line: The Fed is designed to operate independently of politics, but public statements by the president can shape market expectations and potentially influence the Fed's policy decisions indirectly.

Banks and credit unions can adjust their rates at any time at their discretion. You can’t control how rates change, but you can implement smart savings strategies to ride out interest rate fluctuations:

Consider a high-yield savings account. These savings accounts offer higher interest rates compared to traditional savings accounts. When interest rates fluctuate, you can be sure you’re still earning a competitive rate compared to the market average with a high-yield account.

Start now. Compound interest helps your savings grow exponentially over time. The earlier you begin saving, the more your balance will grow. Plus, you’ll have a head start if rates fall in the future.

Shop around. Whether you’re looking to open a new savings account or reevaluate the one you currently have, regularly reviewing the best savings rates available can ensure you’re not missing out on better opportunities.

Lock in your rate. If you think rates may fall soon, putting your money in a CD allows you to lock in competitive rates for the next several months or even years. Keep in mind that CDs require you to keep your money on deposit until the maturity date, otherwise you’ll be subject to an early withdrawal penalty.

This month, the Federal Open Market Committee (FOMC) — a division of the Federal Reserve responsible for setting monetary policy — will meet again to evaluate the health of the economy and make key decisions regarding the federal funds rate.

Following a series of interest rate hikes between March 2022 and July 2023, which were intended to help reverse rising inflation, the Fed held its benchmark rate steady for over a year. However, in September 2024, the Fed decided to lower the federal funds rate by a whopping 50 basis points. It cut its target rate by another 25 bps in November, and again in December.

However, in all of its 2025 meetings so far, the Fed has decided to keep the federal funds rate steady at a range of 4.25% to 4.50%.

These decisions impact not only how the economy functions as a whole but also everyday consumers, as they influence rates on savings accounts, credit cards, mortgages, and more.

Statements and forecasts released during FOMC meetings provide valuable information on the economic outlook. Knowing when the Fed meets to discuss monetary policy and make important decisions can help you get a snapshot of the economy’s overall health and adjust your own financial strategy accordingly.

Read more: Should you open a savings account or CD before the Fed's next meeting?

The FOMC holds eight regularly scheduled meetings per year. Its most recent meeting took place June 17-18, 2025. The next one is scheduled for the end of July.

Here's the Fed's full meeting schedule for 2025:

January 28-29

March 18-19*

May 6-7

June 17-18*

July 29-30

September 16-17*

October 28-29

December 9-10*

* Meeting associated with a Summary of Economic Projections.

At these meetings, policymakers assess the health of the economy by evaluating economic indicators such as the Consumer Price Index (CPI), gross domestic product (GDP), and the unemployment rate to shape monetary policy.

The minutes of regularly scheduled meetings are released three weeks after the date of the policy decision. The live press conferences held by Federal Reserve Chairman Jerome Powell are also livestreamed and recorded.

Once each meeting concludes, the FOMC releases its policy decisions at 2 p.m. Eastern time. Then the Fed Chairman holds a press conference at 2:30 p.m.

Read more: How the Federal Reserve rate decision affects mortgage rates

The next meeting is expected to provide Americans with an update on the federal funds rate. The Fed lowered its target rate in September, November, and December 2024, but did not make any new changes so far in 2025.

"In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent," the FOMC wrote in a recent statement. "In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities...The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective."

Experts believe that the Fed will reduce the federal funds rate again in 2025. However, the number and size of these rate cuts remain to be seen.

Read more: How much control does the president have over the Fed and interest rates?

It’s not possible to predict with certainty what the Fed will decide regarding the federal funds rate. That said, many economists expect two rate cuts this year.

The FOMC holds eight regularly scheduled meetings per year. But this doesn’t necessarily mean the committee will decide to change rates at every meeting. Members assess the economy's performance and the committee adjusts monetary policy accordingly.

The Fed’s current target range is 4.25%-4.50%.

The Federal Reserve's published plan to deliver two interest rate cuts this year will come down to three remaining meetings following the July 30 no-action decision.

Wall Street is betting on two quarter-point rate cuts in September and December. Here's how the long-running interest rate pause is impacting deposits, credit, and debt.

The interest you earn on deposit accounts is meager to practically non-existent.

Your checking account is a cash-in-motion machine. The convenience of liquidity limits your earning power.

The national average of interest paid on checking accounts remains at 0.07%.

Interest rates on savings accounts are a little better, currently holding at 0.38%. But this is not where savvy savers keep serious money.

High-yield savings accounts have been resilient money havens. They're still in the 4% range, with some financial providers slightly above or below that.

This is one category where rate shopping really pays off.

Dig deeper: 10 best high-yield savings accounts

If you have $10,000 or more that you want to keep on the sidelines but nearby, money market accounts have been convenient — but low-paying. National average payouts remain at 0.59%.

A better option might be a high-yield money market account, where rates are still near or a little better than 4%.

Read more: 10 best high-yield money market accounts

CD rates haven't moved much lately. A 12-month CD is averaging 1.63%, but you can find better deals if you're willing to take the time to hunt them down — and park your money in a bank that may not be in your time zone.

Your minimum deposit and term will affect your rate.

Learn more: The best CD rates on the market

And then there are mortgage rates. Let's get this question out of the way: "When will mortgage rates go back down to 3%?"

It’s hard to say with home loan rates still hovering in the upper-6% range.

Whenever the Fed does cut short-term interest rates, it may not be enough to significantly budge mortgage rates. Those are more influenced by the bond market, particularly the 10-year Treasury note, which reacts to forecasts for economic growth — or the lack of it.

Housing industry analysts with the Mortgage Bankers Association, Redfin, Realtor.com, and Zillow expect mortgage rates to remain in the 6% to 7% range through the end of this year.

Dig deeper: When will mortgage rates go down?

Personal loan interest rates have been lingering near 12% for nearly two years. They were around 9.5% for three years, from 2020 to 2022.

Credit card interest impacts everyone — except those who pay off their balance each month.

Credit card rates have spiraled from around 15% in 2021 to over 21% in 2025.

Credit card companies are clinging to the high interest that consumers are apparently still willing to pay. There's been no movement downward, even with last year's Fed rate cuts. Perhaps a couple of rate cuts by the end of the year will move the prime rate down and push the cost of credit cards lower too.

Yahoo Finance tip: The best way to earn a lower credit card interest rate right away is to ask. If you make regular payments and have seen your credit score improving, it's a good time to call your credit card provider and ask for a lower interest rate.

Stock prices often react to the Fed’s rate actions, but they are only one factor among many affecting the investing climate and stock prices.

If you intend to manage your investments to suit the current environment, keep watch on broader economic and corporate profit trends alongside interest rates. If you prefer to stay conservative, fill your portfolio with high-quality stocks that have proven themselves in all economic cycles.

Then, wait patiently for long-term growth.

A hot job market is usually good news for workers. When the unemployment rate is low, people can easily switch jobs and negotiate better pay from employers. Workers have more money to spend, which drives economic growth.

But low unemployment and strong job growth have a downside: A robust job market can drive higher inflation, setting the Federal Reserve on a course to try to reduce it — which can mean a longer wait before interest rates come down.

Meanwhile, an uptick in unemployment can have a silver lining: When inflation slows and jobless numbers increase, the Fed moves to lower interest rates, just as it did following its November meeting, reducing interest rates by 25 basis points. The Fed has held its key rate steady in 2025 with the low end of its target federal funds rate at 4.25%.

If the latest job numbers have you wondering about the interplay between the labor market, inflation, and the Fed — you don’t need to dig out your old macroeconomics textbook to find out. We’ll explain how the job market and inflation are connected, and how the Federal Reserve uses interest rates to influence them both.

Latest news: US labor market adds 147,000 jobs in June while unemployment falls to 4.1%

A strong job market can drive inflation higher, but high inflation can also reverberate through the US labor market.

A tight labor market is typically defined by low unemployment rates, an increase in job openings, and faster-than-usual wage growth. Businesses need to hire more workers to keep pace with surging demand. As businesses are forced to compete for workers, they’re more likely to offer wage increases and higher pay. After all, if your boss refuses to increase your pay, you can easily take your services to a different employer.

Workers, in turn, have more money to spend, which pushes prices higher. Inflation, after all, is often described as too much money chasing too few goods.

Meanwhile, higher labor costs add to the cost of doing business, said Christopher Decker, Ph.D., a professor of economics at the University of Nebraska-Omaha. “Businesses either have to reduce production, [which] typically involves cutting costs elsewhere, increase prices, or both.”

But high inflation also influences the job market, often drawing more people into the workforce in the short run.

Learn more: When is the Fed's next meeting? 

“High inflation will usually lead to an increase in the number of workers to take advantage of the higher wages being paid,” said Thomas Stockwell, Ph.D., an assistant professor of economics at the University of Tampa who studies monetary policy. “However, as workers realize their purchasing power has been eroded by inflation, they will be less willing to work.”

Most consumers generally can’t absorb higher prices forever, though. So eventually, they’ll have to cut their spending in response to rising prices.

“Higher prices will eventually slow, or even reverse, demand growth,” Decker said. “With less demand, the need for more labor is reduced.”

That’s a big reason the Fed kept interest rates at a 23-year high until recently — to the frustration of many would-be homeowners and other borrowers.

“By reducing demand for goods, services, and business investments, there’s less pressure on both wages and prices, so inflation slows,” Decker said.

Fed policymakers have a dual mandate from Congress to promote stable prices and maximum employment.

Learn more: When the Fed cuts rates, how does it impact stocks?

When inflation is high, the Federal Reserve raises the federal funds rate with the goal of cooling off spending. The federal funds rate is the amount banks charge one another for overnight loans. When banks pay more to borrow money, they pass the cost on to consumers in the form of higher interest rates, making it more expensive to borrow money.

The idea is to tame price increases by getting consumers to scale back on spending. If fewer people are making big purchases, theoretically, prices will grow at a slower pace.

The Fed was laser-focused on inflation in the aftermath of COVID-19 lockdowns when soaring energy prices and supply chain disruptions led to the highest inflation levels in decades. That’s why the Fed raised interest rates 11 times between March 2022 and July 2023.

Learn more: The Fed rate cut: What it means for your bank accounts, loans, credit cards, and investments

But the Fed walks a delicate tightrope when it hikes interest rates. In response to a drop in consumer demand, businesses may reduce hiring, causing the unemployment rate to spike. If consumer spending is weak and the unemployment rate is high, the central bank will often cut interest rates in response.

For example, the Fed slashed interest rates to nearly zero in response to the financial crisis of 2007-09 and the COVID-19 pandemic.

The Federal Reserve’s target inflation rate is pretty clear-cut: Since 2012, it has aimed for a 2% inflation rate as measured by the price index for Personal Consumption Expenditures, or PCE. The PCE has been inching closer to that level. Though it remains above the Fed’s 2% target, it’s still well below its recent peak of over 7% in June 2022.

Watch and learn: How 2% became the Fed’s inflation target

The definition of maximum employment, on the other hand, is a lot murkier.

“There is not an explicit target for unemployment like there is for inflation,” said Stockwell. “But to keep inflation steady, it is important to keep the unemployment rate as close to the natural rate of unemployment as possible. This is the unemployment rate that would exist if there were no shortages or surpluses in the labor market.”

Maximum employment isn’t 0% unemployment, Stockwell said, because some unemployment is healthy. There will always be what economists call frictional unemployment, which is driven by people in transition, i.e., you quit your job to find new opportunities or you’re a recent college grad searching for employment.

Some structural unemployment, which is when workers lose jobs due to factors like technological developments, globalization, or widespread changes in consumer demand, will always exist as well.

“Full employment is when the only people unemployed are those who are frictionally or structurally unemployed,” Stockwell said.

But as inflation has cooled, the Fed’s goal of full employment has come into greater focus. Federal Reserve Chair Jerome Powell cited a slowdown in hiring and an increasing unemployment rate — which stood at 4.1% in December and ticked down to 4% in January. The labor market continued to show surprising resilience in June, with U.S. employers adding 147,000 jobs and the unemployment rate at 4.1%. In other words, it's still relatively low.

Back in 2022, when the Fed first started hiking interest rates, many economists believed a recession and higher unemployment were ahead. Thus far, though, neither has materialized. Instead, the US economy actually grew by 3.1% in 2023. S&P Global Ratings forecasts growth of 2.7% in 2024.

So what gives?

Economists are quick to point out that even at recent peaks, interest rates weren’t that high by historical standards. The economy experienced about 15 years of unusually low interest rates before rates started rising, Stockwell said.

“We don't have high interest rates right now,” Stockwell said. “We have returned to more normal interest rates.”

It’s also important to note that not all industries experience a sizzling job market at the same time. For example, sectors like healthcare, education, and state and local government tend to be relatively inflation-proof and aren’t sensitive to interest rates. These sectors have been hiring in large numbers. Meanwhile, Big Tech tends to be interest-rate sensitive and is more likely to lay off workers in a high-rate environment.

Higher interest rates don’t always slow consumer spending by as much as the Fed would like because they don’t affect everyone equally. If you’re looking to buy a home and lock in a low mortgage, you’re struggling with credit card debt, or you’re a business owner seeking financing to expand, high interest rates are painful. But someone who locked in a low-rate mortgage in 2020 or 2021 and doesn’t carry revolving debt may be largely unaffected by high interest rates, so they can afford to keep spending, even if prices continue going up.

There’s no shortage of speculation about where interest rates are headed. But in his comments following the January meeting, Powell said the Fed is not looking too far ahead.

“As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals. If the economy remains strong and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly. Policy is well-positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate."

Read more: Chair Powell’s press conference transcript