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Washington – The Federal Reserve on Wednesday retained interest rates in stable expectations of inflation and decreased economic growth forward, and still pointed to two cuts at the end of this year.
This week the markets are not expected to move the Central Bank, the federal open market has retained its key borrowing level, aimed at 4.25%-4.5%, where it has been since December.
Along with the decision, the committee noted, through it carefully watching the “point section”, that two cuts by the end of 2025 are still on the table. However, this abandoned one decline in both 2026 and 2027, putting the expected four -percent reduction.
The plot pointed to the constant uncertainty of the Fed officials about the future rate. Each point presents the expectations of one official at tariffs. A wide variance took place on the matrix, and in 2027 there was a prospect for the Fed rate about 3.4%.
Seven of 19 participants said they did not want to reduce this year, which is compared to four in March. However, the Committee unanimously approved a policy application.
Economic forecasts from the meeting with the participants indicated on the further pressure of the STAGFlation, and the participants saw how the gross domestic product was moving at 1.4% in 2025, and inflation reached 3%.
GDP forecast is reduced
Revised forecasts from the latest update in March represented a decrease in 0.3 percentage points for GDP and an increase in the same amount by the personal consumption price index. The main PCE, which eliminates food and energy prices, is projected by 3.1%, as well as 0.3 percentage points above. The unemployment forecast noticed a small editorial office up to 4.5%, or 0.1 percentage higher than in March and 0.3 percentage points above the current level.
The FOMC statement has changed little from the master. Overall, the economy has grown at a “solid pace”, with “low” unemployment and “slightly increased” inflation, the committee said.
Moreover, the Committee expressed less concern about the diseases of the economy and clouds over the White House trade policy.
“The uncertainty in the economic forecast has fallen, but remains sublime. The Committee is careful about the risks on both sides of its double mandate,” the committee said.
During Press -conferenceChairman of the Federal Reserve System Jerom Powell suggested that there is time to wait for greater clarity.
“At the moment, we can expect to learn more about the likely economy before considering any adjustments in our policy,” Powell said.
American stocks As a result, the announcement fluctuated near the flat line.
Trump pushes up to the rate of the rate
While Statement Fed did not specify why uncertainty decreased, the president Donald Trump He facilitated some of his fiery trading rhetoric, and the White House is in the midst of a 90-day negotiations over the tariffs.
However, Trump’s rhetoric did not mitigate the Fed.
Earlier on Wednesday, the president again slammed Powell and his colleagues for not mitigating. Trump said Madeling Powell as “stupid” for not pushing the committee to reduce.
Fed officials are reluctant to movefearing that Trump’s tariffs implemented this year may cause Inflation in the coming months. Until now, price sensors have not shown that responsibilities have a great influence. Delayed tariffs together with softening consumer demand and accumulation of stocks on the eve of April 2 announcement “Liberation Day” helped reject their influence.
“Everyone I know is predicted by a significant increase in inflation from tariffs in the coming months because someone has to pay for tariffs,” Powell said.
A conflict between Israel and Iran adds another wild card to the policy mixture with Prospects for increasing energy prices A potential additional factor is to avoid cutting Fed. The statement does not mention the influence of fighting in the Middle East.
Gradually, the softening economy can provide an incentive to reduce this year.
Labor market data show that dismissal will creep, long -term unemployment, also growing and consumers spend less. In May, retail sales collapsed by almost 1% And the latest data reflects the housing cooling market, and in five years it would start to hit the lowest level.
“Effectively they sit on their hands, waiting for tariffs to increase inflation, or the job market will begin, and depending on which part of their double mandate is most likely to direct any direction, although the prejudice is still going to reduce the rates (or at least retaining rates),” Investing in Northlight Asset Asset.
The burned was not surprised that the rates stable. However, he said the market was surprised by the comment that uncertainty was “diminished”.
For Trump, however, the importance of reducing rates is due to the high cost that the government pays for 36 trillion debt financing. Dollars.
This year’s debt interest is up to $ 1.2 trillion and exceeds all budgetary subjects except social security and Medicare. Fed last declined in December and the treasury yield budget deficit Probably suitable up to $ 2 trillion or more than 6% of GDP.
Correction: The participants of the meeting expect the gross domestic product to advance at 1.4% of the rate in 2025. The previous version of history abused this year.
