In recent months, the US has seen a flurry of legislative changes affecting individuals and corporations. The US central bank’s borrowing costs, however, have not changed.
Despite policymakers’ deteriorating economic outlook, the Federal Reserve maintained that approach on Wednesday, maintaining its benchmark interest rate at its current level.
The ruling maintained the bank’s significant lending rate at 4.3%, where it has been since December, and it was the fourth consecutive judgment without action. This occurred even though officials’ projections indicated they anticipated weaker GDP, more unemployment, and quicker inflation than they did a few months prior. The Fed usually boosts borrowing costs when prices rise too rapidly and lowers them if it thinks the economy is having trouble.
In addition to advocating for significant changes to economic policy, such as hiking taxes on goods from across the world, President Donald Trump has frequently urged the Fed to lower interest rates.
Fed officials, who have the authority to determine interest rates without consulting the White House, have expressed concern that a temporary price increase brought on by those new taxes may become a longer-term issue. The rate of price rises, or inflation, was 2.4% in May, which is still more than the Fed’s 2% objective.
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