Fed was worried

Representatives of the federal reserve system at the beginning of this month worried that tariffs could aggravate inflation and create a difficult difficulty with the interest rate issued on Wednesday.

A brief assembly of the meeting on May 6-7 of the Federal Committee in the open market reflects constant doubts about the direction of financial and trade policy, and the officials eventually decided that the best curses are stable rates.

“The participants agreed that the uncertainty in the economic forecast increased further, which made it appropriate to accept the cautious approach until the pure economic effect of the arizzes in the state policy was not more clear,” the protocol said. “The participants noted that the committee may face complex compromises if inflation is more persistent and the prospects for growth and employment weaken.”

Despite the fact that politicians have expressed concern over the direction of inflation and caprications of trade policy, they were nevertheless, economic growth was “solid”, the labor market is “wide in balance”, although the risks are growing that it could weaken and consumers continued to waste.

As it was done after the last reduction in December, FOMC retained its benchmark for federal funds for the purposes of 4.25%-4.5%.

“Considering the forecast of the monetary policy, the participants agreed that with the economic growth and the labor market, the firm and modern monetary policy is moderately restrictive, the Committee could expect more clarity in inflation and economic activity,” the resume said.

The statement after the meeting noted that “the uncertainty in the economic forecast increased further. In addition, the Committee noted that its ability to fulfill its double goals of full employment and low inflation increased due to the uncertainty of politics.

Since the meeting, the officials have repeated that they would wait for more clarity in financial and trade policy before they again consider reducing the rates. The market expectations were responded in kind, and futures traders are now practically without chance to reduce the Fed.

Trade policy has also developed since the Fed last gathered.

Tariffs and permanent saber between the US and China decreased a few days after the Central Bank meeting, and both sides agreed to abandon the most difficult duties waiting for the 90th day of the negotiation. This, in turn, helped to launch a rally on Wall -Strit, although the yield of Bond continues to rise, what Trump sought to hold.

Among the trade war and signs that inflation is slowly going to a 2% Fed goal, Trump expressed the production of Fed officials to reduce rates. Fed Chairman Jerome Powell, however, said the Fed would not fade away from political intervention.

The meeting also presented a discussion on the five -year Fed policy.

When officials last visited their long -range policies, they developed what was called a “flexible medium inflation”, which, in fact, claimed that officials could allow inflations to move above 2% of the target for a while in the interest of promoting more inclusive revenues to the labor market.

In their discussion, officials noted that the strategy “reduced the benefit in the environment with a significant risk of major inflation” or rates not in zero, where they were in the years after the 2008 financial crisis. The Fed carried out interest rates near the lower border, despite increasing inflation after the pandemic, forcing them to aggressive hikes later.

The protocol noted the desire of politics, “reliable for a variety of economic conditions.” Officials also said they did not intend to change the purpose of inflation.