(Bloomberg) – Federal Reserve officials kept the fixed standard interest rate to attend a second consecutive meeting, and it caught between the increasing concerns that the economy is slowing down and that inflation may remain stubbornly high.
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President Jerome Powell has admitted a high degree of uncertainty about President Donald Trump’s important changes in politics, but the central bank’s repetition is not in a hurry to control borrowing costs. He said that officials can wait for more clarity on the impact of these policies on the economy before behaving.
The Federal Open Market Committee voted on Wednesday to keep the standard federal funds in the range of 4.25 % -4.5 %, and said it would slow down the pace that reduces its public budget. The governor of Christopher Waller, who supported fixed retention rates, opposed the decision on the movement of the public budget.
The decision to maintain fixed rates comes at a time when the ambitious and dangerous policy agenda has often put the economy, and the ability of the Federal Reserve to keep it on the right track, under increasing pressure. Trump’s constantly variable plans to impose a customs tariff on American commercial partners have stunned fears of economic slowdown and raised new concerns about inflation-a mixture that can withdraw politics makers in opposite directions.
“Inflation has started to rise, and we are partially thinking in response to definitions. There may be delay in further progress during this year,” Powell said.
Powell said that his basic cause is that any bump in inflation will be “temporary”, but he later added that it would be very difficult to say confidently on the amount of inflation stems from the definitions against other factors.
The S&P 500 rose up when Powell spoke, and the cabinet revenue decreased.
Updated expectations
The new economic expectations showed that federal reserve officials have achieved their expectations for this year, while increasing inflation. He also showed that officials continued to lead the pencil in half the percentage of points this year, according to the intermediate estimates, which means discounts at a quarter of points.
However, eight officials witnessed one decrease or less this year, which emphasized the determination of political makers – at least at the present time – to suppress inflation even if the growth slowed.
Powell said that monetary policy expectations have not changed because the expectations of low growth and the high balance of inflation together.
The point plot explained: Understand how the Federal Reserve expects
The committee said in a statement after the compensation: “The uncertainty over the economic view has increased.” Officials also removed a previous language, saying that the risks to achieving their work and inflation goals were almost balanced.
Officials raised the average estimate of the so -called basic inflation, which expels the prices of flying food and energy, at the end of this year to 2.8 % of 2.5 %. Their view of the 2025 economic growth to 1.7 % of 2.1 %.
They raised their estimate of unemployment to 4.4 % by the end of this year, from 4.3 % who saw in December.
Change
Federal reserve officials have kept fixed prices this year after cutting them at a percentage in the closing months of 2024. Since December, they indicated the desire to see more progress in inflation, and more clarity about the impact of Trump’s policies, before thinking about another step.
At that time, inflation remained high while consumers’ expectations for future prices increased amid an escalating trade war. The spending has eased, the consumer’s confidence has deteriorated sharply.
Powell said the chances of stagnation have risen, but it is not high. He referred to the so -called soft data specifically, such as feelings, as it is a flashing concern, but he emphasized the Federal Reserve’s focus on difficult data. It was reported against data from the University of Michigan, which showed a sharp increase in the long -term inflation expectations, describing it as “out”.
“We understand that the feelings have decreased sharply, but economic activity has not passed yet, so we are carefully watching,” said Powell. “I would like to tell people that the economy looks good.”
Investors’ reaction was negatively to the increasing trade war and anxiety about growth expectations, as the S&P 500 fell more than 10 % from mid -February before reducing some of these losses.
The Trump administration did little to alleviate the recession, as the president said on March 9, the US economy is facing a “transitional period.” Treasury Secretary, Scott Payette, said that the American economy and financial markets need to “get rid of toxins.”
Public budget
The Federal Reserve also said that, starting in April, the maximum monthly amount of the treasury amount will be reduced in its public budget, which is allowed to be prepared without re -investing, to $ 5 billion from $ 25 billion. The maximum mortgage -backed securities will leave unchanged at $ 35 billion. Fadl Walir continues the current pace.
Several officials indicated during the committee meeting in January that it may be appropriate to consider stopping or slowing the budget flow in the Federal Reserve until the federal government no longer opposes debt ceiling, which is the legal limit of the distinctive treasury debts. The United States struck this limit in January.
The Federal Reserve first started slowing the pace that reduces its assets wallet in June – an attempt to reduce the potential pressure of the money market prices.
-With the help of Jonnelle Marte, Matthew Boesler, Vince Golle, Liz Capo MCCORMICK, Laura Curtis and Craig Torres.
(Adds additional comments from Powell starting in the tenth paragraph.)
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