Donald Trump demanded that the Federal Reserve 'doing the right' and lowering the interest rates after chairman Jerome Powell said they would remain stable.
The president believes that lower rates will help relieve the transition to his rates against Canada and Mexico. Reference rates will come from the United States on 2 April.
Trump criticized Powell and the Federal Reserve in a position to Truth Social on Wednesday evening.
'The Fed would be much better off, because American rates are switching their way to the economy (ease!). Do the right one. April 2 is Liberation Day in America !!! '
On 2 April, Trump will implement 'retribution rates' to compensate for the import tax and non-tariff barriers of all trading partner countries.
Lower rates make it cheaper for companies to borrow money, but crucial also makes the loan costs for ordinary Americans, which then have more to spend on goods and services.
Trump believes that in combination with his tariff plans the US economy will increase to new heights.
Powell said on Wednesday that they were planning to lower the rates twice later this year, but not on time for the proposed 'Liberation Day' of Trump.
Donald Trump demanded that the Federal Reserve 'do the right one' and lowered the interest rates after chairman Jerome Powell said they would keep stable
The president is of the opinion that they will help relieve the transition to his rates against Canada and Mexico. Reference rates will come from the United States on 2 April. Trump criticized Powell and the Federal Reserve in a position of social social
Since his appointment, Trump has moved to reduce the worldwide trading flows radically, which already imposes an increase in import duties of 20% on goods from China and 25% rates for goods from Canada and Mexico that do not meet the trade rules of the US-Mexico-Canada agreement.
He has also restored 25% rates for global steel and aluminum imports.
At the moment, the policy signal of Trump's tariff plans is unclear, but much would depend on how quickly every rate -related inflation was moved by the economy and whether the inflation expectations remain properly anchored.
He said that recent strong inflation lectures were unexpected in the past two months, but may be due to people who buy rates before the rates.
The Fed will try to trace those effects, but there are a lot of 'noise' around announcements of rates that are applied and delayed.
The Federal Reserve has kept the interest rates stable, but said it is still planning to cut them twice in 2025.
But civil servants said that inflation is still not under control, and they also revise growth reasons – in both cases blame Trump's policy such as rates.
The decision of the Central Bank keeps the benchmark percentage between 4.25 percent and 4.5 percent, as the analysts had expected.
Powell indicated that, despite the fears for inflation caused by rates, the FED would adhere to his plan this year to lower the rates twice.
That satisfied investors and sent us stock indexes during the afternoon trade, with the S&P 500 rising by more than one percent. That helps 401 (K) S, which have been battered in recent weeks due to sharp decreases in stock prices.
Although the FED rate does not directly affect the rates for loans, credit cards and mortgages, it has strongly influenced them.
“We don't have to be in a hurry to adjust our policy position,” said Powell in comments made after the rate announcement.
FED officials have considered their prospects for inflation this year, with their preferred measure for price increases that are expected to end the year at 2.7 percent versus the 2.5 percent expected in December. Both are above the target of the central bank.
In addition to rising inflation forecasts, the Central Bank is now seeing economic growth slowing down more than previously expected.
The Fed Also expect the unemployment rate to be higher by the end of this year to 4.4 percent.
The projections underline the tight place that the FED can be this year: higher inflation would usually cause the FED to keep its most important rate increased or even increase the rates.
Powell indicated that, despite the fears for inflation caused by rates, the Fed would adhere to his plan to lower twice this year
Although the FED rate does not directly affect the rates for loans, credit cards and mortgages, it strongly influences them
On the other hand, slower growth and higher unemployment would often cause the Fed to reduce rates to stimulate more loans and expenses and to lift the economy.
It is the second meeting in a row that the FED has held its interest rate at around 4.3%, because the central bank has moved to the sidelines while evaluating the impact of the policy of the Trump administration on the economy.
Economists predict that rates will probably increase inflation, at least temporarily. But other policy, such as deregulation, could lower costs and cool inflation.
Powell said that the rising inflation expectations in 'good part' are due to rates as a 'driving factor'.
President Trump's tariff heads sent the S&P 500 to a correction area last week. That is when shares fall more than 10 percent of their highlights.
The explanation of the 'wait -and -see' decision of the FED said Powell that the policy changes of the new administration in trade, immigration, tax policy and regulations will have a combined impact on the economy.
“It is the net effect of these policy changes that are important for the economy and for the path of monetary policy,” said Powell.
The combination of higher inflation and delaying growth can lead to a dreaded period of stagflation.
Economists have increased warnings that a recession may rise if Americans fall behind on car loans and the expectations of long -term consumers for inflation that has risen to the highest level since the nineties since the highest levels
FED officials keep a close eye on the inflation expectations of Americans, who were released in one survey last week.
Inflative expectations – In essence, a measure of how concerned people are that inflation will get worse – are important for the FED because they can be self -fulfilling.
If people expect higher inflation, they can take steps, such as accelerating purchases that can push prices higher.
Retailers from both high -quality and cheaper goods have warned that consumers are becoming more careful because they expect prices to rise due to rates. The retail trade rose modestly last month after a sharp fall in January.
