Trump’s trade wars are putting the US economy at risk. But the Federal Reserve doesn’t appear ready to step in just yet.

AP Photo/Pablo Martinez Monsivais

• The Federal Reserve is expected to leave borrowing costs unchanged Wednesday at the end of a two-day policy meeting.
• Trump has increased pressure on the independent central bank in recent months as his trade wars threaten to hurt the economy ahead of the 2020 elections.
• Economists say other growth data remains solid, however, particularly with significant upward revisions to the April retail sales report.

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The Federal Reserve is expected to leave borrowing costs unchanged Wednesday at the end of a two-day policy meeting, even as President Donald Trump continues to call on officials to lower them.  

The president has renewed pressure on the Fed in recent months as his trade disputes threaten to hurt the economy ahead of the 2020 elections. Trump increased tariff rates on Chinese imports last month and began preparing to target a broader range of products.

Fed Chairman Jerome Powell signaled last month that officials were ready to act on escalating trade tensions, but most economists and investors see the benchmark interest rate remaining at a target range of between 2.25% and 2.5% this month.

"It remains to be seen whether US growth will fall below potential in the back half of the year because of the trade war and related uncertainty," economists at Goldman Sachs wrote in a research note. "In our view, not enough has changed to warrant a clear signal of an upcoming cut."

Economists and industry groups have warned that tariffs act as a tax on American businesses and consumers and delay investment. Against a backdrop of a slowdown in hiring in May and stubbornly low inflation readings, expectations for the Fed to cut rates by the end of the year have increased dramatically.

But economists say other growth data remains solid, particularly with significant upward revisions to the April retail sales report. Powell has separately stressed that he expects price changes to pick up in the future. 

SEE ALSO: The White House is said to be vetting Judy Shelton for a seat on the Fed board. She told us what she would bring to a central bank whose policies she has long criticized.

"While recent economic readings are not on the surface dire enough by themselves to justify a rate cut, the Fed may consider implementing a rate cut as ‘insurance’ against slower growth, particularly in light of ongoing trade policy uncertainty," said Jason Pride, the chief investment officer of private wealth for Glenmede.

The Fed operates independent of political interests, but that hasn’t kept Trump from pushing policies that would be expected to boost growth. The president has repeatedly called on the central bank to slash interest rates and attempted to fill its policymaking board with political allies.

The Federal Open Market Committee last increased the benchmark interest rate by a quarter percentage point in December.

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SEE ALSO: The White House is said to be vetting Judy Shelton for a seat on the Fed board. She told us what she would bring to a central bank whose policies she has long criticized.

Source: Business Insider – gheeb@businessinsider.com (Gina Heeb)