The American Federal Reserve has no “hurry” to re -adjust the interest rates, the chairman Jerome Powell of the Central Bank said Wednesday, after policy makers voted to pause the cuts in the first decision since the return of Donald Trump’s return of the White house.
The FED rate committee unanimously voted to keep the bank’s benchmark-leen percentage between 4.25 percent and 4.50 percent, the FED announced in a statement.
“With our policy position considerably less restrictive than it had been, and the economy that remained strong, we don’t have to be in a hurry to adjust our policy position,” Powell said reporters after the decision.
The break of the FED follows three consecutive tariff reductions that together have reduced its most important rate by a full percentage point.
In her statement, the Fed said that the unemployment rate had stabilized “at a low level”, and the labor market was still solid.
However, inflation remains somewhat increased, “said the FED, and removes a reference in earlier statements to inflation that make progress in the direction of his long -term objective of two percent.
“Due to Design, Powell has given little information to new information during this FOMC meeting,” written economists from CITI in a note to customers on Wednesday, referring to the FED rate committee.
Powell, she added, “effectively” saved all options for the next rate decision of the FED in March.
Trump Slams Powell, Fed
The US Central Bank has a double mandate of the congress to act independently to tackle inflation and unemployment.
It does this mainly by increasing or reducing its most important loan interest in the short term, which influences the loan costs for consumers and companies.
Most analysts agree that the US economy is going reasonably well, with a robust growth, a largely healthy labor market and relatively low inflation that remains above the purpose of the FED.
But in a position of his truth Social Account, President Trump closed both Powell and the Fed and accused them of failure “to stop the problem they have created with inflation”.
Futures traders see a chance of more than 80 percent that the FED will extend its break to assess the cutbacks during his in March meeting, according to data from CME Group.
‘Wait and see’
Since he returned to the office on January 20, Trump has revived his threats to impose huge rates on American trading partners as soon as this weekend and to deport millions of employees without papers.
He also said that he wants to expand the expired tax cuts and reduce bureaucracy on energy production.
Most – although not all – economists expect that Trump’s rate and immigration policy will at least be mild inflation, which increases the costs of goods with which consumers are confronted.
“I think that policy is definitively inflationary, it’s just a matter of to what extent,” said Mark Zandi from the analysis of Moody AFP prior to the rate decision.
Asked about the likely impact of Trump’s proposals, including rates, Powell said that the FED should “wait” how they have influenced the economy.
During the previous meeting of the FED, policymakers called back the number of tariff reductions that they expect this year to be a median of only two, with some assumptions about Trump’s likely economic policy in their predictions, according to minutes of the meeting.
Given the uncertainty about the effect of Trump’s policy on the US economy, analysts are now divided on how many cuts they expect the FED will make in 2025.
“We maintain our basic line that this year, in June, the rates will lower 25 BP (basic points),” wrote economists in Barclays, pointing to the underlying power of the economy.
Zandi from Moody’s Analytics said that he also expected two interest rate letings later in the year.
But, he added: “There are meaningful opportunities that the next step of the FED may not be a rate reduction, it can be a rate increase.”
(Except for the headline, this story was not edited by NDTV staff and has been published from a syndicated feed.)