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He Federal Reserve He maintained his key interest rate under control on Wednesday, reversing a recent trend of relaxation of politics, since he examines what is probably a political and economic panorama full of potholes ahead.
In a widely anticipated movement, the Federal Open Market Committee of the Central Bank went without changes without changes in its indebtedness during the night in a range between 4.25%and 4.5%.
The decision followed three consecutive cuts since September 2024 worth a complete percentage point and marked the first Fed meeting from the frequent Fed critic Donald Trump He assumed the presidency last week and almost immediately announced his intentions that He wants the Central Bank to reduce rates.
He Declaration after the meeting He dropped some clues about the reasoning behind the decision to keep the stable rates. He offered a somewhat more optimistic vision of the labor market while lost a key reference of the December declaration that inflation “has progressed towards” the inflation objective of 2% of the Fed. “
“The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid,” said the new language. “Inflation is still somewhat high.”
A stronger labor market and stubborn inflation would provide less incentives for Fed to facilitate politics. The statement again indicated that the economy “has continued to expand at a solid pace.”
During a press conferencePresident Jerome Powell added that the labor market has not been a significant source of inflationary pressure. He said the Central Bank would need to see “real progress in inflation or some weakness in the labor market before considering making adjustments.”
Stocks fell after the decision To leave the rates without changes.
Recent statements of policy formulators have demonstrated some apprehension about whether progress in inflation has stagnated. The authorities have also said that they want to see how the previous cuts are made on their way through the economy, although the majority expect rates reductions this year.
No contact with Trump
In addition, the decision applies to a volatile political backdrop.
In just over a week, Trump has reduced a strip through Washington’s policies and political norms, since he has signed hundreds of executive orders that seek to implement an aggressive agenda. The president has supported tariffs as an economic and foreign policy tool, ordered a wave of deportations against those who cross the border illegally, and has presented a series of deregulatory measures.
In addition, Trump spoke last week of his confidence that he will reduce inflation and said that “interest rates were reduced” immediately. ” Although the president has no authority over the Fed that is not to nominate the members of the Board, Trump’s statement indicated a potentially controversial relationship with policy formulators as well as during his first mandate.
Powell said He has not had any contact with the president Since he made those statements.
Inferior inflation but not in the objective
Inflation has collapsed sharply since the 40 -year peak that it reached in mid -2022, but the 2% objective of the Fed has remained difficult to achieve. In fact, the Central Bank preferred price caliber It showed the inflation of the headlines increased to 2.4% in November, the highest since July, while the central measure excludes food and energy maintained by 2.8%.
The merchants had been Prices in a probability of almost 100% From the Fed that maintains the line in this meeting and, in fact, it does not see another cut until June. The markets have prices in a fund rate of approximately 3.9% by the end of 2025, which implies a 61% probability of two percentage points cuts this year, according to CME group data.
Economic growth has been solid and consumer spending remained well for 2024. The gross domestic product is tracking an annualized growth rate of 2.3% for the fourth quarter, according to Atlanta’s Fed, which reduced the estimate on Wednesday of the previous perspective by 3.2% as data on private national investment weakened.
The meeting also presented a changed voting composition in the FOMC. Powell And the other seven members of the Board of Governors join this year as voters by the Regional Presidents Austan Goolsbee of Chicago, Alberto Musalem of St. Louis, Susan Collins of Boston and Jeffrey Schmid of Kansas City. The vote to maintain the rate of funds without changes was unanimous.
