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The US Federal Reserve announced interest rates will remain steady at between 4.25 and 4.5% Wednesday, marking the central bank’s first rate decision of President Donald Trump’s second term.
The bank signaled it had no immediate plans to lower rates further, amid increased economic uncertainty arising from Trump’s agenda.
“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the (Fed) will carefully assess incoming data, the evolving outlook, and the balance of risks,” the central bank said in a statement.
“In the current condition, there’s probably some elevated uncertainty because of significant policy shifts,” the Fed’s Chair Jerome Powell said, though, he added, these concerns are likely “passing,” and economic forecasting should stabilize further into Trump’s term.
Trump slammed the Fed’s decision Wednesday, saying the central bank “failed to stop the problem they created with inflation” and has done a “terrible job on Bank Regulation.”
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Analysts said the decision to not lower borrowing costs reflected the country’s lower rates of unemployment and steady consumer spending, despite inflation remaining above the Fed’s 2% target, according to NBC News. Taken all together, the signs suggest the US economy is strong, and doesn’t require the boost a rate cut might provide. The decision could see pushback from Trump, however, who has repeatedly said the bank should lower rates to help deliver on his economic campaign promises.
The Fed could be moving cautiously because of Trump’s other signature policies, including promised mass deportations — that will “lead to higher inflation, or, just as important, raise inflation expectations, which would put the Fed’s long-held 2% inflation target at risk,” one RSM economist said.
Fed Chair Powell declined to comment on Wednesday on Trump’s recent comments at the World Economic Forum in Davos that he would demand the Fed lower rates, stressing the central bank’s independence. The president has not contacted Powell directly to discuss monetary policy since his inauguration, Powell said.
“The public should be confident that we will do our work as we always have,” Powell said.