The “federal” score reveals limited support as a result of interest in July
The protocol of the meeting of the federal reserve system, held on June 17 and 18, showed that only a limited number of politicians expressed their support in reducing interest rates in July, at a time when most members are still concerned about inflationary pressure, especially those that, as a result of customs duties that President Donald Trump intend to be imposed as part of a change in the world trading system.
Despite Trump’s repeated calls to immediately reduce interest rates and his demand for federal reserve reservation, Jerre Powell, to resign, the protocol showed that support to facilitate the cost of borrowing in the nineteenth members of the committee, reports Reuters.
“Most of the participants expected that a decrease in interest would be suitable at the end of this year, and inflationary effects arise as a result of customs duties, which are considered temporary or limited,” the report says.
The committee officials unanimously decided to maintain the target of the interest rate of 4.25 percent to 4.50 percent, the level that has been set since December last year.
The report added: “The participants generally agreed that the continuation of the economic growth and labor market, in addition to the monetary policy, which is still in the field of moderate restriction, allows the Committee to follow the expectation approach and wait for more clarity regarding inflation and economic activity expectations.”
Although there is a wide consensus that a decrease in interest could become suitable at the end of this year, the contrast in visions was clear, since some members saw that the risk of inflation is still the biggest problem, while others expressed their concern about increased risks in the labor market.
The record indicated that seven politicians were expected in their estimates after the meeting did not reduce interest at all within 2025.
The officials of the Central Bank also confirmed that they will continue to follow the prevention of the approach to a change in the monetary policy, against the background of the state of ambiguity at the level of final customs duties and their influence on the behavior of consumers and companies.
The expectations issued after the meeting reflect the adoption of a gradual approach, since the average expectations indicated two percent of the percent by a quarter of the percentage point for each of them until the end of 2025. Investors expect the first reduction in September, and then another reduction in December.
Christopher Wald, the governor of the Federal Reserve System and his deputy Michelle Bowman, indicated in subsequent statements that a decrease in interest could be possible at the meeting on July 29-30. Nevertheless, the last report on work, which became stronger than expected, prompted the markets to reduce their bets on an inevitable reduction, since this scenario is considered as unlikely at present.
It should be noted that Jerome Powell in the federal reserve will continue until May 15.
