The Fed does not "submit" to Trump - It keeps interest rates unchanged, despite political pressure
The Federal Reserve kept interest rates steady and offered little indication of when borrowing costs might be cut. The decision drew dissent from two of the U.S. central bank's governors, both appointed by President Donald Trump. They argue that monetary policy is too tight.
"Today, the Federal Open Market Committee decided to leave our interest rate unchanged. We believe that the current stance of monetary policy leaves us well positioned to respond in a timely manner to potential economic developments," Federal Reserve Chairman Jerome Powell said in a press conference.
"Despite elevated uncertainty, the economy is in a strong position. The unemployment rate remains low and the labor market is close to full employment. Inflation has been somewhat above our 2% longer-term objective, consistent with our goals," Powell added. The Federal Open Market Committee voted 9-2 to keep the federal funds rate steady in the 4.25%-4.50% range for the fifth consecutive meeting.
The statement noted that economic growth “moderated in the first half of the year,” paving the way for a rate cut at a future meeting if that trend continues. But it also noted that “uncertainty about the economic outlook remains elevated” with risks to both the Federal Reserve’s inflation and employment targets. That has added to the central bank’s reluctance to cut rates until the path for inflation and jobs becomes clearer.
This week's meeting marks the first time in more than 30 years that two members of the Washington-based Federal Reserve Board of Governors voted against a consensus-driven rate decision at the central bank. It will further fuel debate about the public pressure Trump is exerting to cut rates on an institution designed to be independent of the demands of elected officials.
President Donald Trump stressed the day before that the Federal Reserve should lower interest rates, as this hesitation is hurting people. "Every percentage point that Powell keeps unchanged costs us $365 billion a year," the American leader said.
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