The Federal Reserve kept its benchmark lending rate unchanged at between 4.25 percent and 4.50 percent on Wednesday, despite pressure from President Trump for further cuts in the first rate decision following his return to office.
The central bank said that the unemployment rate has “stabilized at a low level in recent months, and labor market conditions remain solid,” while admitting inflation remained “somewhat elevated.”
Economic indicators suggest the US economy is performing well, with strong growth, a generally sound labour market, and inflation that, while above the Fed’s two percent target, remains comparatively modest.
The US central bank operates under a Congressional mandate to independently manage both inflation and unemployment.
This mandate is primarily executed through adjustments to the key short-term lending rate, which affects borrowing expenses for both individuals and enterprises.
Since his return to office on January 20, Trump has continued to voice opinions on interest rates, despite the Fed’s autonomous status.
“I’ll demand that interest rates drop immediately,” he declared last week, subsequently stating that he would “put in a strong statement” if the Fed did not consider his position.
Experts remain split regarding the number of rate reductions anticipated this year, citing uncertainties surrounding the economic impact of Trump’s proposed trade and immigration policies.