The Fed maintains its unchanged rates, Jerome Powell defends his independence against Donald Trump

The Central Bank of the United States (Fed) undoubtedly left its interest rates unchanged on Wednesday, for the fifth time in a row, a decision marked by the rare opposition of two governors who wanted a drop.

At a press conference. For example, the president of the Federal Reserve (Fed) Jerome Powell considered that the institution could still afford to wait to know more about the trajectory of the American economy before moving its rates. Meanwhile, He remains. For example, he said, “many, many uncertainties to lift” concerning the repercussions of the volley of new customs duties imposed on the products entering the United States by the Trump government.

The guiding rates – which guide the cost of credit. In addition, have a strong impact on the markets – therefore remain at the level which has been theirs since December, in a range fed maintains its unchanged rates, between 4.25% and 4.50%.

The investors had largely anticipated this status quo. Similarly, but the words of Jerome Powell gave them to think that this scenario was likely to repeat themselves at the next meeting of the institution in September. For example, At Wall Street, after a session overall in the green, the indices turned around and ended up. Similarly, The Dow Jones ended up 0.38% and the enlarged S&P 500 index lost 0.12%. Furthermore, Only the NASDAQ index managed to end in small increase (+0.15%).

No unanimity – Fed maintains its unchanged rates,

The decision to maintain unchanged rates, widely anticipated by investors, has not been taken unanimously. For example, Out of twelve members of the Monetary Policy Committee (FOMC). Meanwhile, two voted against, a situation that had not occurred for over 30 years.

Michelle Bowman and Christopher Waller made their difference fed maintains its unchanged rates, heard. The press release specifies that they pleaded for a drop in rate by a quarter of a point. The two governors had been propelled to their post during Donald Trump’s first visit to the White House.

Michelle Bowman was recently appointed. on the initiative of the Head of State, vice-president of the Fed responsible for the supervision of the banking system. Christopher Waller is seen as a possible successor to Jerome Powell. Governor Waller had publicly said that he wanted a drop in rate. for fear that the labor market will not degrade too much. Her colleague had also said that she was leaning in this direction, even if less firmly in appearance.

Asked about these dissensions. Jerome Powell said that each of the FOMC members had expressed his opinion “with great care”, during a “good meeting”, and fed maintains its unchanged rates, that it was “not surprising” to have divergent points of view with regard to the context.

Analysts had noted. before the meeting, that it was necessary to go back to 1993 to see two governors (and not simply members of the FOMC having the right to vote) to oppose a decision during the same meeting.

Diane Swonk. an economist for KPMG, had estimated before the meeting that he was “not surprising to see dissensions given the immense uncertainty” about the repercussions of Donald Trump’s protectionist offensive. “We know that the Fed would have liked to lower the rates before. and that it did not do it because of customs duties,” she said to AFP.

Fed maintains its unchanged rates.

Powell defends the independence of the Fed

The Fed expects the volley of new customs duties to products entering the United States is reflected in slowed growth, more inflation and more unemployment. She fed maintains its unchanged rates, has so far explained that immobility was preferable. the time to see more clearly on the landing of the American economy.

“We see the very beginning of the effects (from surcharge) on the price of goods”. which could be “more or less” high but will not be zero, said Jerome Powell.

A few hours earlier. Donald Trump had once again said that there was “no inflation” and urged Jerome Powell to lower rates. He has been putting his growing impatience for weeks. He deals with “stupid” the president of the Fed-which he himself appointed to this position during his first mandate-calls on the other central bankers to overthrow him. regularly pretends to want to eject him, and even split last week from a surprise visit to the renovation site of the institution’s headquarters in Washington, which he deems too costly.

Jerome Powell once again defended the independence of the institution in the name of the “general interest”. to prevent political leaders from “acting on the rates for electoral purposes for example”.

According to Bill Adams. Analyst for the Texan Bank Comerica, “political pressures will probably not influence the decisions of the Fed before the end of Powell’s mandate”. “He is admired on both sides of the political spectrum at the Congress. It is respected at Wall Street. At 72. he does not have to worry about his next job “but rather thinks of the image of independence he will leave in history, he believes.