Washington – Despite the president’s criticism Donald Trump and two senior officials objections.
The Federal Open Market Committee set a group with overnight borrowing rates to put aside with a 9-2 vote. Federal funding interest rates will continue to be set between 4.25% and 4.5%. This level sets the charges for overnight loans collected by banks, but affects a large number of other interest rates throughout the economy.
But the decision met opposition from Gov. Michelle Bowman and Christopher Waller, both advocating that the Fed began to ease acknowledge that inflation was under control and that the labor market could soon begin to weaken. This is the first time since the end of 1993 that multiple governors have not voted on interest rate decisions.
The post-meeting statement provided only a few changes to how the Commission views the economic situation.
“Although net export volatility continues to affect the data, recent indicators indicate growth in economic activity in the first half of the year,” The document says. “Unemployment remains low and labor market conditions remain stable. Inflation remains somewhat higher.”
At its June meeting, the committee was more optimistic about the economy, saying the economy “continues to expand at a solid pace.”
Wednesday’s statement said uncertainty about conditions “stays rising”, a less optimistic assessment starting in June, which noted that uncertainty has “reduced but is still rising.”
A slower economy will raise the argument for lower interest rates, although the Commission no longer endorses that view.
Fed chair Jerome Powell Will be Speech at 2:30 pm ET And it could address whether the committee tends to lower the tax rate at its next meeting in September.
The market has The vast majority No measures to rate After the decision, the stock gained Announced. Investors are expected to examine the degree of division of the committee, which usually has 12 voters, but there is no Governor Adriana Kugler at this meeting. Trader expectations The Fed will cut in September, although that may change based on data flow. Fed officials in June said they saw two cuts in total this year.
The news is a remarkable scope for an entity that is swinging economically, but at least openly avoids political competition.
Trump called on Powell’s resignation and was even frustrated by the questionable idea that the law to fire him was questionable. Although he largely backed off the threat of firing Powell, the president has been criticizing a former appointment who now regularly calls it “too late.”
The president suggested the Fed’s benchmark interest rate cut by 3 percentage points, which he said would reduce the tidal cost of rising national debt and help the dying housing market.
Apart from Exceeded rateThe Trump administration has Powell torn and central bank overspending Large-scale reshaping project Two buildings in the Federal Reserve in Washington. Powell insists that overspending is not the product of mismanagement, but the rise in costs since the start of the project.
Wednesday brought more news that could impact the Fed’s path, despite Trump’s reliance.
The Ministry of Commerce reported GDP grew by 3% In the second quarter, it was much stronger than expected. While most of the title gains were driven by a recovery in the first quarter of a massive surge in imports ahead of Trump’s tariffs, the report still reinforces the concept of the economy, but remains on a solid foundation.
In addition, according to the Fed’s main forecasting tool, the report showed that inflation was only 2.1% during the period. Core inflation rose by 2.5%, but both figures fell from first-quarter levels and were close to the Fed’s 2% taboo.
“We respect their independence 100% in the White House, but we also like to respect their analysis,” Kevin Hassett, director of the National Economic Commission, said Wednesday on CNBC. “We hope the Fed will catch up with the data soon. It will be a very big, positive story.”
The next step will be in late August at the annual retreat in Jackson Hole, Wyoming. Historically, the event features the Chairman’s main policy speech.
