The president of the Federal Reserve, Jerome Powellkeeps the point on orientation not to reduce interest rates for the moment. A decision that was not scratched by the continuous pressures by the White House. The line is to wait to evaluate the impact of duties on the economy, before taking any adjustment.
Powell’s strategy
A line, that of Powell, reiterated during the first day of the half -yearly hearing at the US Congress. For the president of the Federal Reserve it is necessary Wait to see what will happen during the summer When the effects of commercial duties on inflation are material. So far – according to Powell’s analysis – the trade has sold what he already had in stock before the duties were taken, for this, to date, the impact of the duties is less marked than expected. So the strategy is to “wait and see” with the interest rates stopped at a quite high fork of 4.25-4.50%.
The accusations of Trump
The decision to leave interest rates unchanged in recent days was Attached with very hard tones by the President of the United States Donald Trump.
“It is too late, Jerome Powell is costing our country hundreds of billions of dollars. It is really one of the most stupid and destructive people in the government, and the council of the Fed is an accomplice. Europe has made 10 cuts, we nobody. We should be lower than 2.5 points and save billions on the entire short -term debt of Biden. We have a low inflation!
Trump wrote in a post on his social truth.
And, again:
“I understand perfectly that my strong criticisms towards him make him more difficult to do what he should do, lower the rates, but I tried in every way. I was kind, I was neutral and I was bad, and kind and neutral have not worked! It is an idiot, and a clear hater of Trump. I do not understand why the board does not climb up this total and complete idiot! regardless, the His mandate expires shortly!“.
The response of the Fed President
“We are focused on the only thing we want to ensure: one Good economy for the benefit of Americans. That’s all. Whatever something else is a distraction. We always focus on this. All we do is because we consider it the right thing to do and we endure the consequences “
During an audition to the US congress, Powell said, answering a question about the continuous harsh criticisms that have come from Trump towards him.
“Let’s do what we consider necessarywhen we consider it necessary, without entering in political considerations “.
The Fed divided: Trump opens a breach in the FOMC
It seems, however, that Trump’s pressures have opened one Breccia in the FOMC. Michelle Bowman, vice -president of the Federal Reserve, said it could Support a cut of the rates already in the meeting of 29-30 Julyif the inflationary pressures remain contained.
“It is time to consider a rate adjustment,” Bowman said in a speech in Prague, explaining that inflation is approaching the goal of 2% and that the impact of the duties appears limited. Bowman has mentioned signs of fragility in the labor market and warned that the risks for employment “could soon become more relevant”.
Governor Waller also said he was open to a cut.
But the Powell’s position does not change:
“Sooner or later we will arrive at a point where we will cut the interest rates, but I would not indicate a meeting (of the FOMC) in particular. I don’t think we should ran because the economy is still solid. If we were to see that the economy weakens consistently it would be a significant element. But if we look at inflation, we expect it to go up to the summer”.
