Jerome comments on the decision of interest rate after increasing pressure from Powell Trump.
federal Reserve On Wednesday, announced that he would unchanged his benchmark interest rate, as policy makers decided to stabilize stable rates amid economic uncertainty as they continue to monitor inflation pressure and labor market figures.
The Central Bank’s decision leaves the rate of benchmark Federal Funds from 4.25% to 4.5%, where it is following all the Fed’s policy meetings this year. The Central Bank cut rates in its final three meetings in 2024, including a 50-base-point cut in September and a 25-base-point cut in November and December.
The Federal Open Market Committee (FOMC), which guides the monetary policy moves of the Central Bank, mentioned in its announcement that “recent indicators suggest that the economic activity increased in the first half of the year. The unemployment rate is low, and the condition of the labor market remains solid. Inflation is somewhat high.”
FOMC abandoned rates from 9–2, in which Fed Governor Michelle Boman and Christopher Waller were dissatisfied with the decision on the grounds that they would have cut the Federal Funds rate with 25-base-points. A governor was absent and did not vote in the meeting.
Federal reserve chair Zerome poly Talked in a press conference after the decision and said that the central bank focuses on its double mandate goals of maximum employment and stable prices, given that “despite the high uncertainty, the economy is in a solid position.”
He said that despite today’s report that the second quarter GDP increased at an annual rate of 3% that the economy increased to 1.2% in the first half of 2025 during accounting for 0.5% contraction in the first quarter.
Powell said that data suggests that the labor market is “roughly in balance and compatible with maximum employment,” and while inflation has reduced its height of 2022, it remains high relative to the 2% long -lasting target of the Fed.
“The policies of the government continue to change, and their effects on the economy are uncertain. High tariffs have begun to show more clearly for some goods prices, but their overall impact on economic activity and inflation remains to be seen,” Powell explained.
He said, “A proper base case is that inflation can be short -lived, reflects a one -time innings in the price level. But it is also possible that inflation can be more frequent than the effects of inflation, and it is a risk to evaluate and manage,” he said. “Our obligation is to keep long -term inflation expectations well anchored, and prevent a one -time growth in the price level from becoming an ongoing inflation problem.”
Powell was asked if the Central Bank is cutting the rate in September, as policy makers would have two more rounds of inflation and labor market figures before their next meeting. He replied that FOMC would not undergo that data, although no decision has been taken about future interest rates and emphasized that the Fed does not do so in advance.
Asked if the recently announced trade deals of the Trump administration have added certainty, Powell admitted that it is “a very dynamic time for business talks”, but we are “still” in a way where things live “because” has been left to solve many uncertainties. “
This is a developing story. Please check back for updates.
