On Wednesday, the Federal Reserve voted to keep the standard interest rate fixed, despite the cash of criticism from President Donald Trump and two objection to prominent officials.
The Federal Open Market Committee, responsible for setting the borrowing price for one night, voted by a 9 -vote for two votes to keep the interest rate unchanged. The interest rate on federal funds will continue in a range between 4.25 percent and 4.5 percent. This level determines what banks impose on one another for one night, but it affects a group of other prices throughout the economy.
Unprecedented objections within the committee
However, the decision was met with opposition from conservatives Michel Buman and Christopher Wald, both of which called the Federal Reserve to start facilitating monetary policy, in recognition that inflation has become under control and that the labor market may begin to weak soon.
This is the first time since late 1993 that more than one conservative votes against a decision of the interest rate.
After the meeting, there were only few changes in the committee’s vision of economic conditions. The document stated: “Although fluctuations in net exports still affect data, recent indicators indicate that the growth of economic activity has slowed in the first half of the year.” The statement added: “The unemployment rate is still low, and labor market conditions are still strong. Inflation is still a little high. ”
The committee was more optimistic at the June meeting, saying that the economy “continued to expand at a strong pace.” A statement on Wednesday indicated that the uncertainty about the circumstances “is still high”, which is also a less optimistic assessment from June, which indicated that the uncertainty was “diminished but it is still high.”
The slowdown in the economy will enhance the argument to reduce interest rates, although the committee has not reached the point of supporting this view.
The markets expect a reduction in September despite the current installation
The markets expected an overwhelming majority not to take any action on interest rates, but they were monitoring the extent of the dispute within the committee, which usually contains 12 voting members, but it missed the province Adriana Kogler at this meeting. Dealers expect the Federal Reserve to reduce interest in September, although this may change depending on the data flow. Federal reserve officials in June narrowly indicated that they expect two total reduction this year.
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