At a meeting earlier this month, Federal Reserve officials are worried that tariffs could exacerbate inflation and cause difficult challenges in interest rate policies, minutes announced Wednesday’s show.
The May 6-7 Federal Open Market Committee overview reflected ongoing uncertainty regarding the direction of fiscal and trade policy, and ultimately determining the best course was to stabilize the fees.
“It would be appropriate for participants to take a careful approach until the net economic outlook has been increased further and the net economic impact of the arrangement of government policy changes is clearer,” the minutes said. “Participants noted that if inflation turns out to be more sustainable while growth and employment outlook weakens, the committee could face difficult trade-offs.”
Policymakers have expressed concern about the direction of inflation and the whims of trade policy, but they still say that economic growth is “solid” and the labor market is “broadly balanced” but risks are weakened and consumers continue to spend.
As they have done since the last cut in December, FOMC has maintained its benchmark federal funding rate at a benchmark federal funding rate of 4.25%-4.5%.
“When considering the monetary policy outlook, participants agreed that economic growth and labor markets remained solid and that current monetary policy is moderately limited. The committee was eager to make it clearer about the outlook for inflation and economic activity,” the summary said.
The statement after the meeting stated: “Uncertainty regarding the economic outlook is further increasing, and the committee said the ability to achieve double goals of full employment and low inflation is increasing due to policy uncertainty.
Since the meeting, officials will consider reducing the rates again, repeating their wait until more clarity is made on fiscal and trade policies. Market expectations are being met in physical form, with Futures Traders now almost no chance of cutting until the Fed’s September meeting.
Since the Fed last gathered, trade policy has also evolved.
The US-China tariffs and ongoing saber ratification were eased a few days after the central bank meeting, with both sides agreeing to drop their most troublesome obligations again with each hold off the 90-day negotiation period. That’s something Trump is trying to contain, as bond yields continue to rise, which helped Kindle the Wall Street rally.
Amid signs that the trade war and inflation rates are slowly coming to the Fed’s 2% target, Trump has drawn Fed officials to a lower fee. However, Federal Reserve Chairman Jerome Powell said the Fed is not influenced by political interference.
This is fast news. Please update for updates.
