BREAKINGBREAKING,
As tariff-driven uncertainty weighs on the US economy, the US Federal Reserve will continue to hold interest rates steady at 4.25-4.50 percent, on par with economists’ expectations.
As the Fed wrapped up its two-day policy meeting, the US central bank made its announcement on Wednesday.
The Committee wants to achieve the highest possible rate of inflation and employment over the long-term. The Fed stated in a statement that “the outlook for the economy is still uncertain”.
Since December, rates have been maintaining this pattern. Jerome Powell, the head of the Federal Reserve, has long argued that the central bank is best positioned to deal with inflationary pressures brought on by US President Donald Trump’s tariffs by maintaining rates consistent.
“Recent indicators indicate that economic activity increased more slowly in the first half of the year. The labor market conditions are stable, and the unemployment rate is still low. The Fed continued, “Inflation is still moderately elevated.”
According to the consumer price index report released earlier this month, inflation increased by 2.7%.
Two of the central bank’s governors, both Trump appointees who concur with him that monetary policy is too tight, disagree with the decision.
The first time in more than 30 years that two members of the Fed’s seven-person board of governors in Washington have voted against a rate decision at the consensus-driven central bank will be discussed at this week’s meeting.
In the Fed’s policy statement, both Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman, who have been mentioned as potential replacements for Powell when his term expires in May 2026, “preferred to lower the target range for the federal funds rate by one quarter of a percentage point at this meeting.”
Pressures placed on Powell
After visiting the Fed headquarters, the US president claimed last week that he thought the central bank was prepared to lower interest rates.
The White House stated in a statement on Wednesday that “there are no more excuses — it is too late for Powell to cut the rates.” This was a day before the rate decision was announced and following mixed GDP data.
The White House has made the latest moves to appoint the central bank to lower rates, including threats to replace Powell and ongoing personal attacks on the Fed chair. Trump called Powell a “numbskull” last week.
However, Powell has long argued that political pressures should not affect the central bank’s monetary policy decisions.
We don’t take the fiscal needs of the federal government into account when asked whether future policy decisions will take into account them. No central bank of an advanced nation does that.
Source: Aljazeera
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