NEW YORK - The US Federal Reserve on Wednesday left the target range for the federal funds rate unchanged at 4.25 % to 4.5 %, despite intense pressure and sharp criticism from the Donald Trump administration.
"Although fluctuations in net exports continue to affect data, recent indicators suggest that growth in economic activity slowed in the first half of the year. The unemployment rate remains low and labour market conditions remain strong. Inflation remains moderately elevated," the Federal Open Market Committee (FOMC) said in a statement.
According to the statement, uncertainty about the outlook for the US economy remains elevated.
The US economy grew by 3 % annualized in the second quarter, while the first quarter saw a 0.5 % contraction, according to data released Wednesday by the US Commerce Department.
The FOMC also stated that it was "strongly committed to promoting maximum employment and returning inflation to its 2% target".
The US consumer price index rose 2.7 % year-on-year in June, marking the biggest increase since February, which is considered the beginning of tariff-induced inflation.
Notably, of the 12 voting FOMC members, two voted to cut the benchmark interest rate by 25 basis points, while one Fed board member did not vote at all.
"It seems to me - and to almost the entire committee - that the economy is not functioning in a way that would be unduly hampered by restrictive policies, and moderately restrictive policies seem appropriate," said the Fed chairman Jerome Powell at a press conference on Wednesday.
He added that the Fed had not yet decided whether to cut rates at its September meeting.
"Higher tariffs are starting to be more clearly reflected in the prices of some goods, but their overall impact on economic activity and inflation remains to be seen," Powell said.
He also noted that the Fed does not take into account the cost to the government or the fiscal needs of the federal government when making rate decisions.
"No central bank in a developed economy does that... If we did, it would not be good - not for our credibility, not for the credibility of U.S. fiscal policy," Powell said.
Trump on Wednesday again called on Powell to cut interest rates and pointed to better-than-expected second-quarter GDP data.
"No inflation! Let people buy and refinance their homes!" Trump wrote on social media.
Xinhua/gnews.cz - GH
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