Published: Thu, May 02, 2019
Worldwide | By Lisa Hogan

Federal Reserve leaves interest rates unchanged, defying Trump’s calls for a cut

Federal Reserve leaves interest rates unchanged, defying Trump’s calls for a cut

After keeping its benchmark interest rate at zero for the better part of a decade in order to stimulate the economy, the USA central bank has raised the rate eight times since Trump became President to keep inflation under control as the economy has improved.

The U.S. economy is "solid", the central bank said in a statement, suggesting it was in no rush to move interest rates, which are at just under 2.5 percent. The most recent statement notes that core inflation, which excludes food and energy, is running below the Fed's 2 percent target.

At their last meeting, Fed policymakers signaled there would be no rate hikes for the remainder of 2019 in light of global economic and financial developments, as well as muted inflation.

"Nothing of what the (Federal Open Market Committee) did today. should be read as a signal that a future change in policy is coming".

Earlier this month, the president tweeted out his unhappiness with Fed policy, claiming that if "the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0 percent GDP, & Stock Market, would have both been much higher & World Markets would be in a better place!" The Federal Reserve also noted further declines in inflation while growth in household spending and business fixed investment slowed as well.

Powell, who's been slammed by President Donald Trump for not doing more to support the economy, told reporters after the Fed left its main rate unchanged that the policy stance is "appropriate right now" and "we don't see a strong case for moving in either direction".

"Actually, by the Fed's own measure, the PCE deflator for inflation has dropped from 2.2% last summer to 1.4% this winter".

Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 p.m. EDT (1830 GMT). This is a technical change meant to bring the overnight inter-bank lending rates down to the middle of the Fed's rate target range following several weeks of slightly elevated rates nearer to the top of range. "We believe the Fed will successfully resist this pressure, but relations with the Trump administration will remain tense in 2019 to 2020".

In his latest attack on the Fed, Mr Trump criticised the central bank for "incessantly" raising rates.

Like this: