. Federal reserve On Wednesday, he maintained a key interest rate, reversing the recent trend of alleviating politics, because he analyzes what will probably be a bumpy political and economic landscape.
In the commonly expected move, the Federal Committee of the Open Bank Bank left the unchanged rate of loans in the range of 4.25%-4.5%.
The decision took place after three simple cuts from September 2024. Values with a full percentage point and meant the first Fed meeting since frequent Fed criticism Donald Trump He accepted the presidency last week and gave his intentions almost immediately Wants the central bank to lower the rates.
. Statement after the meeting He dropped some tips on the justification for the decision to maintain rates. This provided a slightly more optimistic view of the labor market, losing a key reference from the December statement that inflation “made” 2% of the Fed inflation target.
“The unemployment rate has stabilized at a low level in recent months, and the working market conditions remain solid,” we read the new language. “Inflation remains slightly increased.”
A stronger labor market and stubborn inflation would provide less incentive for FED to facilitate politics. The statement again indicated that the economy “is still expanding at a solid pace.”
During a press conference. Chairman Jerome Powell added that the labor market was not a significant source of inflationary pressure.
The last statements of decision -makers showed some fears whether the progress in lowering inflation was sticked. Officials also said that they want to see how previous cuts work through the economy, although most expect foot reduction this year.
In addition, the decision takes place on an unstable political background.
In just over a week, Trump cut a swath in Washington's policy and political norms, because he signed hundreds of executive orders that are trying to implement an aggressive program. The president supported the tariffs as a tool of economic and foreign policy, ordered a wave of deportation against people illegally crossing the border and presented a number of deregulation.
In addition, Trump said last week about his certainty that he would reduce inflation and said that he would “demand” immediately lowering interest rates. ” Although the president has no authority in relation to the Fed, in addition to nominating board members, Trump's statement signaled potentially controversial relations with decision -makers as during his first term.
Powell said he had not had contact with the president since he made these statements.
Inflation dropped violently from the 40-year peak he achieved in mid-2012, but the 2% Fed target remained elusive. In fact, the central bank Preferred price indicator The headline inflation was shown to be higher up to 2.4% in November, the highest than July, while the basic remedy, excluding food and energy is 2.8%.
Traders were Prices in almost 100% probability From the Fed keeping the line at this meeting and he does not see the next cut by June. Markets are valued at the rate of funds of approximately 3.9% to the end of 2025, which means 61% probability of two points this year, according to CME group data. Stocks He fell after the decision.
Economic growth was solid, and consumer expenditure remained well in 2024. The gross domestic product is followed at an annual growth rate of 2.3% in the fourth quarter, according to Atlanta Fed, which reduced the estimates on Wednesday from previous perspectives to 3.2 % As weaken as data on private domestic investments.
The meeting also included a changed composition of voting in FOMC. Powell And this year, the remaining seven members of the governors join as voters by regional presidents Austan Goologe from Chicago, Alberto Musalem from St. Louis, Susan Collins from Boston and Jeffrey Schmid from Kansas City. Voting for maintaining the degree of funds was unanimous.