• The Federal Reserve is widely expected to keep its benchmark interest rate flat when the central bank’s policy committee meets Wednesday.
  

• The Fed has kept interest rates higher than usual all year to counteract inflation, and hasn’t lowered them out of concern President Donald Trump’s tariffs could push up prices for consumers.
  

• Trump has repeatedly criticized the Fed for not cutting rates, and could renew that pressure if the Fed keeps rates flat as expected.
  

The Federal Reserve is likely to stick to its “wait-and-see” mantra next week, setting it on a collision course with the president.

The Federal Reserve is widely expected to hold its key interest rate steady when the central bank’s policy committee meets Wednesday, possibly provoking more wrath from President Donald Trump, who has repeatedly demand the Fed, which is not under direct control of the White House, cut its benchmark interest rate by an entire percentage point.

Financial markets late Friday were pricing in just a 3% chance of a rate cut this month, according to the CME Group’s FedWatch tool, which forecasts rate movements based on Fed funds futures trading data.

In recent weeks, Fed officials have said they’re reluctant to lower interest rates from their current elevated levels because they’re concerned Trump’s tariffs will reignite the high inflation that has fallen to within shooting distance of the Fed’s target of a 2% annual rate, after surging in the post-pandemic era. For his part, Trump has frequently browbeaten the Fed for not having cut rates this year, going so far as to call Fed Chair Jerome Powell a “numbskull”.

A lower fed funds rate could boost the economy and encourage job creation, but it could also take some of the downward pressure off inflation.

Fed officials have been under a communications “blackout” over the past week in advance of the meeting, but before they went silent, members of the Federal Open Market Committee said they wanted to see how the economy responded to Trump’s tariffs before making any policy moves.

The tariffs pose a dual threat to the Fed’s dual mandate to keep inflation low and employment high: not only could the import taxes push up prices, but they could hurt the economy, potentially pushing up unemployment. If inflation proves the greater threat, the Fed could keep interest rates higher for longer, or alternatively, could cut rates to rescue the economy if the job market starts to crumble.