Federal Reserve disregards Trump's instructions - no adjustment in interest rates made.
Fed Holds Ground, Bucks Pressure From Trump: No Rate Cuts Imminent
Hey there! Let's chat about the US Federal Reserve's recent decisions regarding interest rates. And oh boy, President Trump ain't happy about it.
The Showdown
With inflation hanging around moderate levels, the Fed has kept its cool and refrained from tampering with interest rates. This decision comes despite strong requests from the White House. To top it off, the Fed lowered its economic growth expectations and increased its projection for the annual tax rate. Bet you Trump ain't too thrilled about that.
Rate Remains Steady
The US Federal Reserve is keeping the key interest rate in its current range of 4.25 to 4.50 percent—a move that doesn't sit too well with President Trump. He's been putting pressure on the central bank chief and even flirted with the idea of appointing himself as the US Fed chair.
Confronted with these headwinds, the Fed's chief economist, Alexander Krüger of Hauck Aufhäuser Lampe Privatbank, says, "Trump will have to wait his turn for rate cuts. The Fed is sticking to its guns and waiting for more data. Makes sense given the high uncertainty due to US trade policy and geopolitics."
Under Fire
The Fed finds itself right in the middle of a delicate balancing act. It needs to hold onto its credibility by sticking to its mandate of maintaining price stability, all while avoiding any appearance of political influence. Lena Dräger, research director at the Kiel Institute for the World Economy (IfW), sums it up: "The Fed's in a tough spot, facing pressure to keep inflation in check while avoiding any whiff of political meddling."
Looking Ahead
Additionally, the Fed revised its economic projections for the US. It now expects lower growth, forecasting a 1.4 percent increase for the year, down from its earlier projection of 1.7 percent. Inflation expectations also went up, with the Fed anticipating a 3.0 percent inflation rate, up from its previous estimate of 2.7 percent.
Despite higher import tariffs, inflation has only slightly increased. Consumer prices rose 2.4 percent year-on-year in May, up from 2.3 percent in April. Experts believe the real impact of Trump's tariffs will be felt later on.
A Tense Standoff
According to Elmar Voelker, chief economist at LBBW, "The economy's not as robust as it was at the end of last year. So when it comes to rate cuts, the Fed's still aiming for a return, but the current monetary policy's still seen as hindering US economic growth."
In conclusion, the Fed's remaining steadfast in its monetary policy decisions, focusing on inflation containment and moderate economic expansion. Despite pressure from the President, the Fed is relying on data-driven assessments to guide its decisions.
Sources: ntv.de, jwu/rts
- Fed
- Monetary policy
- Tax rates
- Economic growth
- Trade policy
- Geopolitics
- Inflation
- Donald Trump
- The Fed, amidst pressure from President Trump, has maintained its monetary policy, focusing on inflation containment and moderate economic expansion, as indicated by its decision to keep the key interest rate unchanged and lower its initial economic growth expectations.
- In the midst of the delicate balance between maintaining its mandate of price stability and avoiding political influence, the Fed has to navigate the challenge of high uncertainty due to US trade policy and geopolitics, as highlighted by Alexander Krüger, the Fed's chief economist.
