Even under heavy pressure from stock markets and President’s office, Federal Reserve has held its ground on not announcing any interest rate cuts for this year. The decision came even while discussions were on about how loosening the policy could help market conditions before end of this year. The central bank has predicted a couple of cuts in its economic predictions for the future but clarified that it will not happen till 2020. Though the meeting held this week was cautious about interest rates markets are still confident that rate cuts by Federal Reserve could happen as early as July this year.
The door to thoughts along those line were opened by Powell at a press conference where he issued a statement that participants now regard case as more accommodative due to strength in policy. Federal Open Market Committee members voted by an overwhelming majority to keep benchmark within target range of 2.25 to 2.5 % as it had been there since December. James Bullard Fed President of St. Louis voted to bring down the rate. This action could lead to direct confrontation between Fed Chairman Jerome Powell and US president Donald Trump since he had been pressuring the former to cut down rates.
Powell when asked about his job stability in view of circumstances stated that as he is keen on completing his full four year long term. The strong majority of this month’s decision has contrasted with difference of opinion among members about what is likely to happen next. Though the interest rate was not cut, the split vote among members shows that it could happen anytime soon as bond markets are expecting the same. The nation’s inflation is below Federal target of 2 % and their headline inflation target is at 1.5 % while core inflation which includes essentials like food and energy prices is estimated to be 1.8 % from 2 % as per economic projections.