Federal Reserve officials also removed a reference to growing concerns about downside risks to the labor market. Now they say they are “attentive to the risks to both sides” of the dual mandate; that is, inflation and employment.
Some analysts are already anticipating a long pause, as the Fed noted that economic activity is expanding at a “solid pace,” compared to December’s “moderate pace.” And although they point out that “it is still somewhat high,” they made no reference to the fact that it continues to increase.
Fed Governor Stephen Miran, along with Christopher Waller – who is seen as a possible candidate to succeed central bank Chairman Jerome Powell – instead backed a quarter-percentage-point cut.
The Fed has made quarter-point cuts in its last three policy meetings as it worried about a weakening labor market. Miran, recently appointed by Trump, advocated for larger reductions each time.
But strong GDP growth, relatively low unemployment and persistent inflation have given reason for a pause, again pitting Fed leaders against Trump, who has urged lower interest rates.
Lower interest rates make credit cheaper and therefore encourage investment and consumption.
Trump has dramatically stepped up pressure on the bank since returning to power a year ago.
He has sought to oust Fed Governor Lisa Cook, while his administration opened an investigation into Powell over the remodeling of the bank’s headquarters.
With information from AFP
