The Federal Reserve (Fed) open-end market committee today begins a two-day meeting. Analysts expect to leave an interest rate unchanged second time in a row and adopt a waiting tactic for the effects of the President Donald Trump policy. This causes a lot of uncertainty in the US.
The Fed on its first schedule in this year’s session at the end of January in the central interest rate is unchanged between 4.25 and 4.50 percent. The decision marked a pause after three reductions of borrowing cost.
Pause, according to the expectations of most experts, continue in the second year-old session. The President of the Central Bank of Jerome Powell told the hearing in the US Congress in February that interest rates are low enough and that the Fed faces uncertainty and unknowns, which is why not rushing interest changes.
By far the most important source of uncertainty is the policy of the American President Trump. Ever since 20. He returned to the White House, and especially the last week, his unpredictable and daily decisions on customs entered a lot of instability in domestic and world economies.
Economists are almost the only ones that agree that this type of aggressive trade is, even towards the closest allies and economic partners of the United States, harmful to strengthen the inflation, which in February was 2.8 percent and so far from the Fedtime of two percent. Trump Tariff policy also carries a risk of recession.
On the other hand, it is not yet clear how much effect will have measures to reduce public consumption and federal administration, the richest man in the world Elon Musk, as well as the abolition of regulatory measures, provides for tax reduction, especially for the company and the richest, transmits SEEbiz.
These measures, despite controversiality, which is the reason for numerous legal disputes, and some moves and temporarily suspended by the court, could at least somewhat have positive consequences for the economy.
According to Powll’s words, the Fed will wait for the “net effect” of all these measures to see what this means to fulfill the mandate of the Central Bank. It is a double nature because the Fed, except for price stability, also cares about favorable working market conditions. “We don’t need to rush, we are in a good position to wait for more clarity,” Powell said recently in New York, the French News Agency AFP.
However, Trump expects that the FED will take measures that will encourage the economy, which primarily means lowering the interest rate. Therefore, it is not excluded that, similar to the Trump’s first term, there will be a conflict of the White House and the Central Bank and the powerful pressure on Powell and the entire central body of monetary policy.
