After Trump repeated his calling for lower interest rates in Davos, The Fed as expected kept its FFTR unchanged between 4.25% and 4.50%, after cutting rates by 1% from last Sep. 18 to Dec. 18 on progress in achieving its inflation 2% yearly goal and for supporting the labor market.
The committee members voted unanimously to keep the Fed Fund rate unchanged showing conventional readiness to wait further for more clues about inflation and labor market.
The committee underscored that the economic activity is still growing by solid pace driving GDP rate well above 2% in 2024, the labor market stabilizing at low levels of unemployment, without wages inflation pressure adding significantly to the inflation which is still elevated above its 2% yearly target, as PCE broad figure rose by 2.6% in December and its core increased by 2.8% yearly.
Following last Dec. 18 meeting, the Fed justified its last cutting action saying in its statement that inflation had made progress toward its 2% target, but it returned following January meeting to state that the pace of price remains elevated highlighting the need to pause now waiting for more to indicate its outlook.
The committee statement assured again on that there is no preset course of interest rate, it will keep following the incoming data and it is well-positioned to take what is suitable of decisions for achieving its mandate of reaching price stability and maximum employment.
After questions about the conflict that could be between the monetary policy and the fiscal policy which contained the market sentiment recently and added uncertainty about the interest rate outlook, The Fed’s Chairman Jerome Powell who had several confrontations versus Trump in his first Era avoided provoking him by criticizing any of his fiscal policies impact on inflation or on the economic activity.
He assured repeatedly on The Fed’s mandate and commitment to have price stability and reaching maximum possible employment level avoiding talking directly about the well-known limited power on the Fed by the white house.
In the same time, he highlighted that the committee members unanimously decided to not be hurry in cutting the interest rate from the current level preferring observing what can the new fiscal and migration policies can lead to of data to move the Fed.
He tried to show that the Fed is doing only what is needed for achieving its mandate without mentioning the option of tightening.
He said that there was now direct contact between him and the president yet and he did not talk about the Fed’s independency.
But we have to mention here that it is still unknown yet the impact of these planned imposed tariffs by Trump’s administration on the economic activity and the inflation outlook, while it became obvious that executing his immigration tightening policies can have negative impact on the economic activity and specially the agriculture sector.
As there are currently 8.3m undocumented working immigrants in US, forming 5.2 of the labor force as “center for migrations studies” CMS said.
Have a good day
Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
The committee members voted unanimously to keep the Fed Fund rate unchanged showing conventional readiness to wait further for more clues about inflation and labor market.
The committee underscored that the economic activity is still growing by solid pace driving GDP rate well above 2% in 2024, the labor market stabilizing at low levels of unemployment, without wages inflation pressure adding significantly to the inflation which is still elevated above its 2% yearly target, as PCE broad figure rose by 2.6% in December and its core increased by 2.8% yearly.
Following last Dec. 18 meeting, the Fed justified its last cutting action saying in its statement that inflation had made progress toward its 2% target, but it returned following January meeting to state that the pace of price remains elevated highlighting the need to pause now waiting for more to indicate its outlook.
The committee statement assured again on that there is no preset course of interest rate, it will keep following the incoming data and it is well-positioned to take what is suitable of decisions for achieving its mandate of reaching price stability and maximum employment.
After questions about the conflict that could be between the monetary policy and the fiscal policy which contained the market sentiment recently and added uncertainty about the interest rate outlook, The Fed’s Chairman Jerome Powell who had several confrontations versus Trump in his first Era avoided provoking him by criticizing any of his fiscal policies impact on inflation or on the economic activity.
He assured repeatedly on The Fed’s mandate and commitment to have price stability and reaching maximum possible employment level avoiding talking directly about the well-known limited power on the Fed by the white house.
In the same time, he highlighted that the committee members unanimously decided to not be hurry in cutting the interest rate from the current level preferring observing what can the new fiscal and migration policies can lead to of data to move the Fed.
He tried to show that the Fed is doing only what is needed for achieving its mandate without mentioning the option of tightening.
He said that there was now direct contact between him and the president yet and he did not talk about the Fed’s independency.
But we have to mention here that it is still unknown yet the impact of these planned imposed tariffs by Trump’s administration on the economic activity and the inflation outlook, while it became obvious that executing his immigration tightening policies can have negative impact on the economic activity and specially the agriculture sector.
As there are currently 8.3m undocumented working immigrants in US, forming 5.2 of the labor force as “center for migrations studies” CMS said.
Have a good day
Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din