Bloomberg – Federal Reserve officials maintained stable interest rates for the third consecutive meeting and stressed that they see a growing risk of increasing inflation and unemployment.
“Uncertainty about economic perspectives has increased even more,” said the Federal Mercado Open Committee in a statement on Wednesday At the end of a two -day meeting in Washington. “The committee is attentive to the risks for both sides of its double mandate and judges that the risks of greater unemployment and greater inflation have increased.”
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Officials unanimously voted in favor of maintaining the reference rate of federal funds in a range of 4.25% to 4.5%, where it has been since December.
The S&P 500 index of US actions rose after the announcement, while the treasure yields fell and the dollar cut profits.
The commercial policy of President Donald Trump has unleashed a wave of uncertainty throughout the economy. Although the levies are still negotiating, economists generally expect expansive tariffs to drive inflation and weigh on growth. That would face the two objectives of the political leaders -pricing and maximum employment.
The president of the Federal Reserve, Jerome Powell, will offer a press conference to journalists at 2:30 p.m. in Washington.
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With unemployment still low and stable demand, Fed officials have said they feel comfortable keeping rates without changes until they have a better understanding of where the economy is directed. Trump, however, has repeatedly said that the Central Bank should lower indebtedness costs.
Powell and his colleagues are determined to prevent tariffs from providing a persistent increase in inflation, and several officials have indicated that they would not support to lower interest rates preventively to protect themselves against a deceleration of the economy.
Economic panorama
The concern for the recession has increased, and some companies have reported that they have stopped their investment decisions in the face of uncertainty. However, the labor market continues to resist, and entrepreneurs added 177,000 jobs in April. According to the statement, those responsible for the Federal Reserve described the conditions of the labor market as “solid”.
Economists claim that time will be needed for the total effect of new tariffs to have an impact on the economy. Until now, the impact has mainly included a strong decrease in trust and an increase in imports. The American economy contracted at the beginning of the year for the first time since 2022, but an indicator of the underlying demand remained firm.
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“Although the oscillations of net exports have affected the data, Recent indicators suggest that economic activity has continued to expand at a solid pace, ”says the statement.
Companies rushed in the first quarter to import goods before tariffs, and increased consumer spending in March suggested that households also tried to advance their purchases. The main inflation indicators cooled during the month.
Trump, meanwhile, has intensified his criticism of Powell in recent weeks. At one point, Trump said in a publication on social networks that “Powell’s cessation can’t get enough!”
But the president has insisted since he has no intention of saying goodbye to Powell.
The Fed said it would continue to reduce its balance to the reduced rhythm announced at the March meeting. The monthly limit on the amount of treasure values that they can overcome without being reinvested remained at US $ 5,000 million, while the limit for mortgage -backed securities also remained unchanged at US $ 35,000 million.
The Central Bank announced Tuesday that the president of the Fed of Kansas City, Jeff Schmid would be missing the May meeting due to his wife’s recent death. Kansas City was represented by the first vice president, Kim Robbins. Schmid’s vote passed to the Alternate member Neel Kashkari, president of the Minneapolis Fed.
Read more at Bloomberg.com
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