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Washington – The federal reserve maintained on Wednesday stable interest rates in the expectations of higher inflation and lower economic growth, and has always stressed two reductions later this year.
The markets do not expect any chance of moving from the central bank this week, the Federal Open Market Committee has maintained its target key loan rate in a range between 4.25% to 4.5%, where it has been since December.
In addition to the rate decision, said the committee, through its “plot of points”, that two cuts at the end of 2025 are still on the table. However, it allowed a reduction for 2026 and 2027, which put the cuts of future rate expected at four, or a complete percentage point.
The conspiracy has indicated a continuous uncertainty of Fed officials on the future of rates. Each point represents the expectations of an official for rates. There was a wide dispersion on the matrix, with a perspective pointing to a federal fund rate of approximately 3.4% in 2027.
Seven of the 19 participants said they didn’t want any cup this year, against four in March. However, the committee approved the policy declaration unanimously.
The economic projections of Reunion participants highlighted new stagflationary pressures, the participants saw the gross domestic product advance at a rate of 1.4% in 2025 and inflation reaching 3%.
GDP forecasts drop
The revised forecasts of the last update in March represented a decrease of 0.3 percentage points for GDP and an increase in the same amount for the price index of personal consumer expenses. The Core PCE, which eliminates food and energy prices, was projected at 3.1%, also 0.3 higher percentage points. Unemployment prospects have experienced a small revision, up to 4.5% or 0.1 percentage point greater than March and 0.3 percentage points above the current level.
The FOMC declaration has changed little compared to the May meeting. In general, the economy increased at a “solid pace”, with “low” unemployment and “somewhat high” inflation, “said the committee.
In addition, the Committee indicated less concern about the economy’s girations and clouds on the White House trade policy.
“Uncertainty about economic prospects has decreased but remains high. The committee is attentive to the risks on both sides of its double mandate,” said the committee.
During A press conferencePresident of the Federal Reserve Jerome Powell suggested that it is time to wait more clarity.
“For the moment, we are well placed to wait to find out more about the likely course of the economy before considering the adjustments of our policies,” said Powell.
American stocks were slightly lower than the advertisement.
Trump pushes to lower rate drops
While The Fed Declaration did not explain why the uncertainty reflected, the president Donald Trump has attenuated part of its fiery commercial rhetoric and the White House is in the middle of a 90 -day negotiation period on the prices.
Trump’s rhetoric towards the Fed, however, has not softened.
Earlier Wednesday, the president again criticized Powell and his colleagues so as not to make sure. Trump said the rate of federal funds should be at least 2 lower percentage points and ridiculed Powell as “stupid” for not pushing the committee to cut.
Fed officials hesitated to moveFearing that the prices that Trump implemented this year could cause inflation in the coming months. Until now, price gauges have not indicated that the tasks have a lot of impact. A delay in food for food food as well as softening the demand of consumers and an accumulation of inventories before the announcement of the “Liberation Day” of April 2 helped to divert their impact.
THE conflict between Israel and Iran add another joker to the mixing of strategy, with Prospects for the rise in energy prices An additional potential factor to prevent the Fed from cutting. The declaration did not mention the influence of the fights of the Middle East.
A gradually softening economy could encourage to reduce later this year.
Recent data on the job market show that long -term unemployment layoffs are also increasing and consumers spend less. Retail sales released almost 1% in May And the recent data has reflected a cooling housing market, with beginnings reaching their lowest level in five years.
“Indeed, they are sitting on their hands, waiting to see if the prices increase inflation or that the job market begins to vacillate, and the part of their double mandate is first impacted to guide the direction they take, although the bias is always to the cutting rates (or at least the unchanged placement rates;
Zaccarelli was not surprised that the prices were stable. However, he said the market was surprised by the comment that uncertainty had “decreased”.
For Trump, however, the importance of lower rates follows from the high cost that the government pays to finance its debt of 36 billions of dollars.
Interest on the debt is on the right track to total $ 1.2 billion this year and exceeds all other budgetary elements, with the exception of social security and health insurance. The last Fed Cup in December and the yields of the Treasury were kept higher throughout the year, putting additional pressure on a budget deficit Likely to approach 2 dollars, more than 6% of GDP.
Correction: The participants in Reunion expect the gross domestic product to increase at a rate of 1.4% in 2025. A previous version of history disturbed the year.
