The United States Federal Reserve has left its benchmark rate unchanged despite mounting pressure from President Donald Trump to cut rates.
On Wednesday, the Fed said it will leave its short-term rate unchanged at 4.25 percent to 4.5 percent.
The central bank’s decision was largely in line with expectations, and it has not cut interest rates since December.
The decision comes as policymakers weigh signs of a weakening economy. US retail sales numbers fell more than expected in its report from the US Department of Commerce yesterday. Last week’s jobless claims report from the US Department of Labour came in at its highest in eight months at 248,000.
However, the last jobs report showed the unemployment rate was steady at 4.2 percent, indicating the labour market, while slowing, remains fairly stable.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has diminished but remains elevated,” the central bank said in a statement.
“Fed Chair Jerome Powell has little urgency to ease. But if any easing were to have occurred, it would have been hugely stimulative, and would have lowered US debt interest expense,” Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, told Al Jazeera.
Policymakers are looking at the looming and consistently shifting changes to Trump’s tariff policies as well as the escalating tensions in the Middle East. While oil prices were on the decline before Israel’s attack last week on Iran and its retaliatory strikes, the concerns about a closure of the Strait of Hormuz as tensions escalate have fueled concerns that prices could go up in the coming weeks.
Trump criticises Powell
Before the rate announcement, Trump expressed disappointment in the central bank’s decision to hold rates steady in the past few months.
“Powell’s too late,” he said, referring to his desire for rate cuts. “I call him ‘too late Powell’ because he’s always too late. I mean, if you look at him, every time I did this I was right 100 percent, he was wrong,” Trump said.
He added that he “may have to force something” but it is not clear what Trump meant by that.
He also suggested that he should lead the central bank. “Maybe I should go to the Fed,” Trump said. “Am I allowed to appoint myself at the Fed? I’d do a much better job than these people.”
Powell’s term is set to expire next May, and Trump has recently walked back his rhetoric on firing the central bank head.
“What I’m going to do is, you know, he gets out in about nine months, he has to, he gets fortunately terminated … I would have never reappointed him, [former President Joe] Biden reappointed him. I don’t know why that is, but I guess maybe he was a Democrat … he’s done a poor job,” Trump said.
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