Washington (AP) – The Federal Reserve will continue to wait and see how the economy develops before deciding whether it should reduce its most essential interest rate, said chairman Jerome Powell on Tuesday, an attitude that is directly after the demands of President Donald Trump for immediate cuts.
“For the time being, we are well positioned to learn more about the probable economic course before we consider adjustments to our political attitude,” said Powell on Tuesday before the House Financial Services Committee.
Several Republicans of the Committee urged Powell to reduce the loan costs faster as soon as he did at the end of July. On the whole, the hearing was uniformly polite and Powell criticized no piercing criticism of the decision of the Fed to leave their rate unchanged.
Members of both parties thanked Powell to maintain the double mission of the Fed to control inflation and to support maximum employment. Powell has often cited his support in the congress as a bulwark against Trump’s attacks.
Trump excluded again in the early Tuesday and published on his social media website: “I hope the congress really works this very stupid, stubborn person. We will pay for his incompetence for many years.”
Several Republicans asked Powell why the central bank had not yet reduced the credit costs. Powell replied that most economists inside and outside the FED still expect that the tariffs want to drive inflation higher, and the political decision -makers of feeding want to see what will happen in the next few months before making changes.
“We expect tariff inflation to appear more,” said Powell. “We really don’t know how much of it is guided by the consumer. We have to wait and see.”
Powell admitted that the tariffs could not build up the tariffs as much as the economists predict. That, he said, could lead the Fed to reduce interest rates faster. A sturdy enhance in the unemployment rate could also cause the FED to reduce the loan costs faster, he said.
“We could see that inflation is not as strong as we expect,” he said. “And if that were the case, it would tend to cut it earlier.” However, when Powell was asked especially after July, it refused to comment.
Powell also said that he had expected the effects of the tariffs on prices in the next few months from June. The June Inflation Report will be published on July 15th.
MP Josh Gotheimer, a democrat from New Jersey, asked Powell whether Trump’s “bullying” would influence the decision -making process of the Fed.
Powell said the Fed wants to “deliver a good economy for the benefit of the American people, and that’s it.”
“Everything else is a kind of distraction,” added Powell. “We always do what we think is right and we live with the consequences. I don’t know how to do the job otherwise.”
The 19-member interest-assembly committee of the FED, which is headed by the chairman, decides whether the loan costs should be reduced or increased. As a rule, they enhance the rates to nippy the economy to combat inflation or prevent and reduce the rates when the economy is frail to enhance borrowing and expenses.
The FED committee unanimously voted last week to keep its pleading unchanged, although the FED also published forecasts of future interest rate cuts, which resulted in emerging departments among political decision -makers. Seven forecast no rate reductions at all this year, two only one, while 10 forecast at least two reductions.
The Fed chair said the bump to inflation from tariffs could be temporarily or lead to a more persistent inflation.
The “commitment of the FED”, said Powell, “should … a one -time increase in the price level preventing a persistent inflation problem.”
At a press conference last week, Powell proposed that the Fed would monitor how the economy developed in summer in response to Trump’s tariffs, and indicated that a installment reduction would only take place in September.
But since then, two top -class members of the Fed Board of Directors, Michelle Bowman and Christopher Waller, have suggested that the central bank could reduce in July. Both officials were appointed by Trump during his first term, and Waller is often mentioned as a potential replacement for Powell when his term ends next May. Powell was also appointed by Trump at the end of 2017.
However, other officials are still careful about the reductions in installments. Beth Hammack, President of the Cleveland branch of the Federal Reserve, said on Tuesday that the tariffs in view of the uncertainty that envelops the economy could stand in the queue for “quite a bit of time” before the Fed decides to make “very modest cuts”.
Trump calls on the Fed to reduce interest rates to save the US government’s money for interest payments that are attached to the enormous public debt. However, the FED has long opposed the government’s financing costs for interest decisions and preferred to focus on the health of the economy and inflation.
Waller said in an interview on Friday that the government’s reduction in the government’s credit costs was “not our job” and added that it was at the Congress and the White House to reduce the budget deficit.
Trump repeated his false assertion on Tuesday on Tuesday that the European Central Bank has reduced its clothing ten times, while the Fed did not shorten at all. In fact, the ECB has reduced eight times in the past 12 months, and the FED did this three times all at the end of last year.
The Fed’s cuts last year reduced their rate to around 4.3%. Since then, it has been concerned that Trump’s tariffs lead to inflation, a reduction in the break. The president has served a service of 10% for all imports and an additional delivery of 30% to goods from China, 50% on steel and aluminum and 25% for cars.
Inflation has constantly cooled this year despite widespread concerns of the economists on the effects of tariffs. From April to May, the consumer price index has only strengthened by 0.1%, the government said last week, a sign that the price pressure was steamed.
