The Federal Reserve of the U.S. disappointed many hopes when Chairman Jerome Powell announced Wednesday that the Fed would keep interest rates the same despite pressure to lower them.
President Donald Trump has been hammering away at the Fed to lower rates, but Powell, whom Trump has nicknamed “Too Late,” has said that the president’s tariff policies have made the federal banks cautious about dropping rates too early.
‘We have seen steady employment numbers, a solid retail sales report, and the first print of Q2 GDP came in above expectations.’
Earlier on Wednesday the economy was reported to have grown at 3% in the period between April and June, a strong indicator that a recession is not in the near future. That was higher than expected and boosted hopes that the Fed might lower rates.
“‘Too Late’ MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!” wrote the president on Truth Social.
Powell has set a 2% threshold for inflation at which he would be comfortable dropping interest rates, but in April the consumer price index hit 2.3%, and it climbed to 2.7% in June. The next CPI report will be released in August.
Some noted that two of the Fed governors, Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman, voted in favor of lowering rates, which was a surprising dissent from the majority opinion.
Economic expert and Blaze Media contributor Carol Roth wrote in a statement to Blaze News that the split decision by the Fed likely meant that the organization is considering dropping rates the next time the governors meet.
“The Fed has been consistent about telegraphing its intentions ahead of time, so it is no surprise that the Fed held their target interest rates steady. However, with two dissents from Fed governors Waller and Bowman, the odds of a September rate cut are likely to increase in the days ahead,” she wrote via email.
“The biggest challenge to a Fed rate cut today was actually good economic news. That is, we have seen steady employment numbers, a solid retail sales report, and the first print of Q2 GDP came in above expectations,” she added. “It is difficult to make the argument that the Fed’s monetary policy is holding back the economy when solid economic data continues to come out.”
Trump has also criticized Powell for a renovation at the Federal Reserve headquarters that has ballooned to cost more than $2.5 billion. Some in his administration have called for Powell to be investigated for possible fraud in the renovation, and others have called for his resignation. On Thursday Powell and the president met with news cameras rolling at the worksite and seemed to calm some of the controversy.
Powell was first nominated to the chairmanship by Trump in his first term. The president has since indicated many times that he would like to fire Powell, and the chairman has responded by saying that he would not step down if asked by Trump.
“We’re never going to be influenced by any political pressure,” said Powell in April. “People can say whatever they want. … That’s not a problem, but we will do what we do strictly without consideration of political or any other extraneous factors.”
The Federal Reserve does not determine mortgage rates directly but indirectly, by setting the federal funds rate by which commercial banks borrow money.
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The post Fed Chair Powell defies Trump, keeps interest rates unchanged despite good economic reports appeared first on TheBlaze.
