The US Federal Reserve on Wednesday opted to keep its benchmark interest rate unchanged for the fifth consecutive meeting, holding the target range at 4.25% to 4.50%. The decision, however, came with signs of internal disagreement and growing caution about the economic outlook.
In a split vote, the Federal Open Market Committee (FOMC) maintained its stance in a 9-2 decision, with two Trump-appointed governors, Michelle W. Bowman and Christopher J. Waller, dissenting in favour of a quarter-point rate cut. Adriana D. Kugler was absent from the meeting and did not vote.
Ahead of the announcement, Trump slammed Powell saying, “Each point that this gentleman keeps up costs us $365 billion a year. Think of that one point, $365 billion. If you bring it down to a point, we save $365 (billion). We should be the lowest interest rate. And we’re not.” He further added, “He’s got a meeting today, but I call him too late. You know, he’s always too late. Even if he does it today, probably won’t. I hear they’re going to do it in September. Not today. For what reason? Nobody knows.”
The Fed acknowledged that while swings in net exports have continued to influence the data, recent indicators point to a moderation in economic activity during the first half of the year. Labour market conditions remain solid, and the unemployment rate continues to stay low. However, inflation is still running somewhat above the central bank’s 2% target.
“Uncertainty about the economic outlook remains elevated,” the Fed said in its post-meeting statement. “The Committee is attentive to the risks to both sides of its dual mandate.” The dual mandate includes, maximum employment and stable prices.
The central bank reiterated its commitment to bringing inflation back to the 2% goal and said it will continue reducing its holdings of Treasury securities and mortgage-backed assets. The Fed emphasised it would take a data-dependent approach in determining the timing and extent of any future rate adjustments. Looking ahead, the Committee said it stands ready to adjust the stance of monetary policy as needed should new risks emerge that threaten its goals.