WASHINGTON: The US Federal Reserve opened its two-day policy meeting Tuesday, with the central bank widely expected to hold off on further interest rate cuts despite fierce political pressure from President Donald Trump to slash levels.
Fed policymakers have kept the benchmark lending rate unchanged since their last rate reduction in December, as officials wait for clarity on how Trump’s tariffs are impacting the world’s biggest economy.
Their patient approach has riled the president, who has chastised Fed Chair Jerome Powell on multiple occasions, calling him a “numbskull” and a “moron.”
On Tuesday, the Fed said in a statement that its policy meeting started at 9:00 am US Eastern time (1300 GMT) as scheduled.
Fed poised to hold off on rate cuts, defying Trump pressure
The case for holding interest rates steady at a range between 4.25 percent and 4.50 percent this week has been made by several Fed speakers, said JP Morgan chief US economist Michael Feroli in a recent note.
Inflation remains above the Fed’s longer-term target of two percent, risks still persist and the labor market is near full employment, he added.
The Fed has signalled it is waiting on the effects of Trump’s sweeping tariffs on allies and competitors alike to begin to show up in economic data.
As the central bank mulls changes to monetary policy, officials are seeking a balance between price stability and maximum employment.
Analysts are expecting to see some dissent from Fed policymakers at the end of their meeting Wednesday, given that a couple of officials have signaled openness to rate cuts as soon as in July.
“It will be interesting to watch whether Powell alludes to some potential policy easing before year-end” or if he avoids explicit forward guidance given differences among the Fed’s rate-setting committee, said EY chief economist Gregory Daco.
“With no imminent need to act, and a fractured FOMC facing asymmetric risks, the Fed will likely wait until September to deliver the next 25 basis points rate cut,” Daco added, referring to the Federal Open Market Committee.
The Fed said Governor Adriana Kugler would not be attending the meeting “due to a personal matter.”
Comments
Comments are closed for this article.