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The chairman of the Federal Reserve Jay Powell indicated that he would go back on calls for cutbacks at interest rates, and says that the American economy remains “solid” and the effects of President Donald Trump’s trade war and other policy changes are “uncertain”.
Two members of the board of the FED-Chris Waller and Michelle Bowman-Hebben in recent days said they would support a reduction in the next rate voice of the FED in July, and said that recent inflation lectures suggested that Trump’s rates would have less impact than drove.
Although Powell will acknowledge on Tuesday that the impact of Trump’s rates is now expected to be less dramatic than predicted in April, he will tell the congress that “increases the rates will probably increase prices this year and weigh economic activity”.
Powell, whose term of office as FED chairman ends in May 2026, is on the way of the US President on the decision of the Federal Open Market Committee to keep the interest rates on hold. Trump has branded a “Numbskull” and called for a reduction in the benchmark loan costs of no fewer than 3 percentage points.
The FED reduced the loan costs last year by 1 percentage point, but most FOMC officials say they want to wait and see how the impact of the trade war is going on before they are reduced again.
In prepared remarks, the FED chairman says that although the inflationary impact of the US president’s policy could “be short -lived”, it was “also possible that the inflationary effects could be more persistent instead”.
In the meantime, the American economy remains “in a solid position”, and indicates that Powell believes that the interest rates can remain where they are now, without damaging the labor market of America.
“The unemployment rate remains low and the labor market is on or almost maximum work,” Powell will tell the home of representatives shortly after 10 hours.
With 4.25 to 4.5 percent, the Benchmark – target range of the FED remains a restrictive area – above a neutral level that does not limit any growth or traces.
FED officials are increasingly being divided on where the loan costs will end at the end of 2025.
Although both Waller and Bowman want cutbacks in July, seven officials do not think that the interest rates will completely move this year.
Ten members support two or more quarter points cuts, with the remaining two backing one cut.
