The Fed opens the Trump era leaving rates unchanged

Donald Trump Criticism The choice of the Fed to leave the rates unchanged – The interval is between 4.25% and 4.50% – as the first monetary policy move during its second presidency. For the governor Jerome Powell “there is no hurry to review the rates”. The new US president does not like and rejects the policies followed in recent years by the US central bank: “since” Jay Powell and the Fed have not been able to stop the problem they created with inflation, I will do so by stimulating American energy production, By cutting the regulation, rebalancing international trade and rekindling production “. The judgment of the whites of the White House is clear: “The Fed has done a bad job on banking regulation. The treasure will guide the efforts to cut unnecessary regulations and free loans for all American people and businesses. If the Fed He had dedicated less time to the gods, to gender ideology, green energy and false climate change, inflation would never have been a problem.

Last week, speaking at the Davos forum, Trump had asked the Federal Reserve to immediately lower the rates. But the main focus of the fed board remains to keep inflation under control – with the 2% target – which is still evaluated “rather high”. Wall Steet expands losses after the choice of unchanged rates, with the markets questioning on a new possible rise in the consumer price index.

The economic perspectives, evaluate the Fed, “are uncertain and the committee is attentive to the risks for both parts of its double mandate”. Recent indicators analyze the Fed, “suggest that economic activity has continued to expand at a solid rhythm”. While the unemployment rate “has stabilized at a low level in recent months and the conditions of the labor market remain solid”. In this scenario, the “Try to reach the maximum employment and inflation rate to 2% in the long run”. The Committee also believes that “The risks for achieving its occupation and inflation objectives are more or less in balance.In evaluating the appropriate position of monetary policy, the FOMC of the Fed “will continue to monitor the implications of the information coming for the economic perspectives”. The Committee says he is ready to “adapt the position of monetary policy as appropriate if risks emerge that could prevent the achievement of the objectives”.

On the decisions of the Fed board hovering the effects of the first choices of economic, fiscal policy and in the field of immigration that will make the new Trump government: from possible duties to the repatriation of migrants. With the consequent possibility that inflation can return to grow. The questions for Powell in the conference after the Fomc meeting touch almost all these topics. The head of the Fed clarified that he had not had any contact with Trump. Powell, replying to the questions on the subject, said that he would not provide any answer on the president’s words as “would not be appropriate”, we “continue to work with his head down”.

Powell notes: “We don’t know what will happen with duties, immigration, tax policy and regulation policy. We will observe carefully”. The Fed “will wait and study”. In the meantime, the observation that the stars and stripes economy “is strong and has made progress in recent years. We remain concentrated to achieve maximum employment and the stability of prices”.
Meanwhile, Thursday will be the turn of the European Central Bank: it is the first board of the year, and it is expected that a cut of the cost of the money of another quarter of the point is decided, bringing the reference rate from 3 to 2.75%. It would be the fifth cut since he started loosening monetary policy last June. But The attention of the operators is in particular on the divergence of views between the Eurotower and the American central bank. The fundamental question is if the ECB is at ease with the growing distance between its path of monetary policy and that of the largest central bank in the world. For this reason, a particular focus will be given to the words of President Christine Lagarde at the press conference.
According to analysts, the ECB will cut again in March and June bringing the reference rate to 2% by the end of the year. But there is a lot of uncertainty, especially regarding the impact of American duties on the (weak) growth of the Eurozone and inflation.