US Federal Reserve defies calls from Trump to cut interest rate

The Federal Reserve has defied calls from US President Donald Trump for an interest rate cut by leaving it unchanged.

The decision means it has an effective rate of 4.3%, where it has remained since the central bank, known as the Fed, reduced it three times last year. "We're keeping the rates high, and it's hurting people from buying houses," Mr Trump told reporters.

"All because of the Fed." Money latest: Three major broadband firms hike prices The bank has independence from government - as the Bank of England has in the UK - but Mr Trump has repeatedly questioned Fed chair Jerome Powell's future and initially suggested he should be fired. In June, the US president labelled Mr Powell a "stupid person" after the Fed decided not to change rates.

Then less than two weeks later, in a further attack, he said the Fed's chair should "ashamed" and would "love" him to resign. The US president has spent months verbally attacking Mr Powell.

There were clear tensions between the pair last Thursday as they toured the Federal Reserve in Washington DC, which is undergoing renovations. When taking questions, Mr Trump said: "I'd love him to lower interest rates," then laughed and slapped Powell's arm.

The US president also challenged him, in front of reporters, about an alleged overspend on the renovations and produced paperwork to prove his point. Mr Powell shook his head as Trump made the claim.

When Mr Trump was asked what he would do as a real estate mogul if this happened to one of his projects, he said he'd fire his project manager - seemingly in reference to Mr Powell. Unlike the UK, the US interest rate is a range to guide lenders rather than a single percentage.

The Fed has expressed concern about the impact of Mr Trump's signature economic policy of implementing new tariffs, taxes on imports to the US. On Wednesday, the president said he was still negotiating with India on trade after announcing the US will impose a 25% tariff on goods imported from the country from Friday.

Mr Trump also signed an executive order on Wednesday implementing an additional 40% tariff on Brazil, bringing the total tariff amount to 50%, excluding certain products, including oil and precious metals. Read more from Sky News:Visa blamed for payment errorsCare provider nears collapseApollo set to buy £7bn stake in MFG The committee which sets rates voted 9 to 2 to keep the benchmark rate steady, the two dissenters were appointees of President Trump who believe monetary policy is too tight.

It had been revealed hours earlier that the US economy had grown by more than expected in the second quarter of the year but much of the growth could be explained by an unwinding of high inventories at the start of the year, in preparation for a possible trade war. In a policy statement to explain its decision, the Federal Reserve said that "uncertainty about the economic outlook remains elevated" but growth "moderated in the first half of the year," possibly bolstering the case to lower rates at a future meeting.

Nathan Thooft, chief investment officer at Manulife Investment Management, described the rate decision as a "kind of a nothing burger" and it was "widely expected". Tony Welch, chief investment officer at SignatureFD, agreed that it was "broadly as expected".

He added: "That explains why you're not seeing a lot of movement in the market right now because there's nothing that's surprising.".