Federal Reserve, Jerome Powell, announced that despite the uncertainty, the economy is still in a strong position, and that inflation is still slightly higher than the target, pointing out that the central bank “did not make any decisions regarding the Federal Reserve meeting in September.”
“We do not see any weakness in the labor market, and it is still balanced.”
US President Donald Trump said minutes before the committee announced its decision, that he expected the “Federal Reserve” to reduce the benefit at his meeting next September.
Divisions of voting have emerged within the committee, as 9 members supported the decision, while Michel Bowman, Christopher and Ed voted against the decision, expressing their preference to reduce the target scope of the benefit by a quarter of a percentage point, and this is the first opposition to take place since 1993. This dispute reflects two different views on the developments of the American economy. While the majority sees that time is still early to facilitate monetary policy, the opposition considered that the economic slowdown may justify the reduction of monetary tightening.
On this division, Powell said: “What we want is a clear explanation, and we have obtained it today. Think of the members carefully about this and expressed their positions. ”
He explained that the indicators indicate a slowdown in economic growth, and it greatly reflects the slowdown in consumption. He pointed out that the customs duties imposed pressure on some commodities, and that the impact of the fees began to appear in the prices of consumers, and that “inflationary effects can be more continuous.” He added, “I expect to see more effects of customs definitions in inflation data.” She noted that the effects of customs duties cannot be separated from inflation, considering at the same time that the status of monetary policy is “suitable” to protect against inflationary risks.
And whether there was optimism to reduce interest rates next September, Powell said: “We have not made any decisions regarding the Federal Reserve meeting in September.” He believed that the economy needs a somewhat restricted policy regarding the interest rate.
Traders are now reducing their bets on the possibility of the federal reserve reduced interest rates more than once this year. They also did not fully take into account the possibility of reducing interest in October.
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