\n<\/p>\n
The US Federal Reserve left interest rates unchanged after its first rate-setting meeting of the year on Wednesday, resisting enormous pressure from the White House to lower rates.<\/p>\n
A majority of members in the Fed\u2019s federal open market committee (FOMC) voted to pause interest rate cuts after slashing rates three times in the fall. Rates currently sit at a range of 3.5% to 3.75%.<\/p>\n
The Trump administration has put unprecedented pressure on the Fed chair, Jerome Powell, to cut rates, with Donald Trump launching personal attacks on Powell and the justice department opening a criminal investigation into his handling of the refurbishment of the central bank\u2019s offices.<\/p>\n
The FOMC has 12 voting members and meets just eight times a year to set interest rates. The stakes of each meeting have been high during Trump\u2019s second term. Though economists say that the Fed\u2019s independence, as the US central bank, is key for economic stability, the president has unabashedly tried to bend the Fed to his economic agenda.<\/p>\n
Chart showing interest rate changes over time<\/p>\n
Cutting interest rates can spur short-term economic activity, though at the risk of pushing up prices in the long term. But Trump has claimed that the Fed not lowering interest rates costs the US economy \u201chundreds of billions of dollars\u201d.<\/p>\n
Fed officials have resisted these calls. In December, at the last FOMC meeting, Powell implied the Fed would be pausing cuts for the time being. \u201cWe\u2019re well positioned to wait and see how the economy evolves from here,\u201d he said. After the Fed meeting, Trump called Powell \u201cstiff\u201d and said that the rate drop \u201ccould have been doubled\u201d.<\/p>\n
The full extent of Trump\u2019s anger would not be seen until 11 January, when Powell \u2013 whose term as chair is up in May \u2013 announced he was under criminal investigation.<\/p>\n
The investigation is focused on congressional testimony that Powell gave last summer on renovations at the Fed headquarters, which has gone over budget. Trump alleges Powell committed fraud, though the Fed chair has said that the renovations were necessary safety upgrades to decades-old buildings.<\/p>\n
In a recorded statement, what many said was a remarkable defiance of Trump\u2019s bullying, Powell called the investigation a \u201cpretext\u201d.<\/p>\n
\u201cThe threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,\u201d Powell said. \u201cThis is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions \u2013 or whether instead monetary policy will be directed by political pressure or intimidation.\u201d<\/p>\n
The investigation remains ongoing, despite swift backlash from business leaders and some Republican lawmakers.<\/p>\n
Despite these ongoing threats, Powell on Wednesday said a majority of Fed policymakers believe interest rates are at a neutral level, suggesting that further rate cuts will not be coming any time soon.<\/p>\n
\u201cI think, and many of my colleagues think, it\u2019s hard to look at the incoming data and say that policy is significantly restrictive at this time,\u201d Powell said.<\/p>\n
The Fed chair declined to answer multiple questions on the investigation, including whether the Fed responded to the justice department\u2019s subpoena. He also declined to comment on whether he will remain on the Fed\u2019s board after he steps down as chair. Powell\u2019s term on the board is set to expire in 2028.<\/p>\n
But Powell made it clear that he remains a staunch believer of Fed independence and expressed the importance of the Fed retaining its credibility.<\/p>\n
\u201cMonetary policy can be used through an election cycle to affect the economy in a way that\u2019s politically worthwhile,\u201d Powell said. Having an independent central bank is a \u201cgood practice\u201d, and if that\u2019s lost, \u201cit would be hard to restore the credibility of the institution\u201d, he cautioned.<\/p>\n
\u201cIf people lose the faith that we are making decisions only on the basic assessment of what is best for everyone \u2013 for the wider public, rather than trying to benefit one group or another \u2013 if you lose that, it\u2019s going to be hard to retain it,\u201d Powell said. \u201cAnd we haven\u2019t lost it. I don\u2019t believe we will. I certainly hope we won\u2019t.\u201d<\/p>\n
When asked if he is confident the Fed can maintain independence at this point, Powell said: \u201cYes \u2013 I mean, I am strongly committed to that, and so are my colleagues.\u201d<\/p>\n
Asked for his advice for his successor Fed chair, Powell was willing to provide an answer. \u201cStay out of elected politics, don\u2019t get pulled into elected politics. Don\u2019t do it,\u201d he said. \u201cIt\u2019s easy to criticize government institutions in so many ways. I will tell whoever it is: you are about to meet the most qualified group of people you not only have ever worked with, [but that] you will ever work with.<\/p>\n
\u201cWhen you meet Fed staff \u2013 and not everybody is perfect \u2013 but there isn\u2019t a better cadre of professionals more dedicated to the public well-being than [those] working at the Fed.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The US Federal Reserve left interest rates unchanged after its first rate-setting meeting of the year on Wednesday, resisting enormous pressure from the White House to lower rates. A majority of members in the Fed\u2019s federal open market committee (FOMC) voted to pause interest rate cuts after slashing rates three times in the fall. Rates<\/p>\n","protected":false},"author":1,"featured_media":43020,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[319,518,519,4784,4785,520,517,81],"class_list":{"0":"post-43019","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-federal","9":"tag-holds","10":"tag-interest","11":"tag-piles","12":"tag-pressure","13":"tag-rates","14":"tag-reserve","15":"tag-trump"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/43019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=43019"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/43019\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/43020"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=43019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=43019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=43019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}