La Jornada: Fed maintains interest rates; points to increase at the end of the year

Washington. The United States Federal Reserve (Fed) maintained, as expected, its interest rates in the first monetary policy meeting chaired by Kevin Warsh, and suggested that an increase could be decided between now and the end of the year, in a context of growing concern about inflation that remains above the 2 percent objective.

The Fed decided to keep interest rates unchanged in a range of between 3.50 and 3.75 percent for the fourth consecutive meeting, with a unanimous vote for the first time in a year. In addition, it updated its economic forecasts: it now expects inflation for this year of 3.6 percent instead of 2.7 and gross domestic product growth of 2.2 percent compared to the previous 2.4 projected in March.

Monetary policy makers affirmed that economic activity is “expanding at a solid pace, despite high uncertainty, which is due, in part, to the conflict in the Middle East.”

“Inflation remains elevated relative to the (Monetary Policy) Committee’s 2 percent target, partly reflecting shocks of supply that have driven price increases in certain sectors, including energy,” he said.

Central bank officials raised their interest rate projection for the end of the year, with a rise before the end of 2026.

The president of the United States, Donald Trump, considered this Wednesday the Fed’s forecast to raise rates “hard to believe”: “It only weighs down the country and is very unusual,” he told reporters at Orly airport, on the outskirts of Paris. “But right now we have a great guy in charge, so I go with what he wants,” he added, referring to Warsh, whom he named himself.

Wednesday’s statement was shorter than usual and also removed forward guidance on the interest rate path, which had been a constant in recent years.

The document, more concise and which represents a return to a format similar to that used by one of his predecessors, Alan Greenspan, was approved unanimously, with 12 votes in favor and none against.

In a press conference after the meeting, Warsh said that the monetary policy statement refrained from offering the so-called “forward-looking guidance” because they are not “appropriate” for the current economic situation.