Washington: The US Federal Reserve held its benchmark federal funds rate steady on Wednesday, maintaining it within the 4.25% - 4.50% target range, aligning with widespread expectations.
According to Anadolu Agency, the Fed's decision reflects its ongoing assessment of economic activity, which it noted has moderated in the first half of the year, despite fluctuations in net exports. The Federal Open Market Committee (FOMC) reiterated its commitment to achieving maximum employment and a 2% inflation rate over the long term. The Fed acknowledged the current low unemployment rate and solid labor market conditions, although inflation remains somewhat elevated.
The Fed emphasized that future adjustments to the policy rate will be made with careful consideration of incoming data, the evolving economic outlook, and the balance of risks. Furthermore, the central bank will persist in reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities.
This decision follows a period of uncertainty stemming from US President Donald Trump's global tariffs and his frequent criticisms of Fed Chair Jerome Powell. Trump has accused Powell of not acting quickly enough in the face of mounting economic risks, repeatedly urging the Fed to cut interest rates, especially in light of actions by European central banks. Trump warned that any delays could potentially stall the US economy.
Additionally, the Trump administration criticized the renovation project of the Fed's buildings in Washington. During a visit to the site, Trump expressed dissatisfaction with the project, comparing it unfavorably to his own developments, yet emphasized the importance of completing it while advocating for lower interest rates.
In a separate incident, there were reports suggesting that Trump contemplated firing Powell, though he later dismissed these claims, stating it is "highly unlikely" he would take such action. However, he left open the possibility of taking measures against Powell for "possible" fraud.
The Federal Reserve has maintained the interest rate at a historically high level of 5.5% from July 2023 to September 2024 before gradually reducing it to the current 4.5%. Despite political pressure, the Fed has opted to keep the rate unchanged in the last five meetings.