From the Los Angeles Times
Despite pressure from President Trump to lower borrowing costs, Federal Reserve officials on Wednesday left their key interest rate unchanged and indicated that they were divided on whether there would be rate cuts in the coming months.
Even though about half of the Fed’s monetary officials see a rate cut later this year, the other half were not yet convinced, according to an updated projection issued Wednesday.
The Fed hasn’t cut its benchmark rate in more than a decade and, until January, was on a rate hike campaign to forestall possible overheating in the U.S. economy.
But more recently, clouds have formed over the global economy, in part because of Trump’s trade war with China. The Fed also has become increasingly concerned about the low rate of inflation, which has been running below its 2% target, in what could suggest underlying weakness in the economy.
The Fed, wrapping up its two-day meeting Wednesday, slightly downgraded its assessment of economic activity and, significantly, noted that uncertainties in the outlook had increased. It didn’t mention the trade conflict with China, but Fed Chair Jerome H. Powell is expected to discuss trade and explain the Fed’s thinking at a news conference Wednesday afternoon.
Although noting the increased risks to growth, the Fed said the U.S. labor market remained strong and that household spending, which accounts for most of America’s economic activity, seemed to have picked up from earlier this year.
And Fed officials continued to project steady growth of about 2% for this year and next — essentially unchanged from its previous estimates in March.
Trump has blasted the Fed for raising rates last year and has pressed Powell and his colleagues to lower rates. Financial markets also have been calling for rate cuts, with futures markets betting on a rate reduction at the Fed’s next meeting at the end of July.
The Fed’s decision Wednesday to maintain its main rate at between 2.25% and 2.5% was widely expected. There was one dissenting vote among the 10 policymakers.
