In its latest board decision, the US Federal Reserve has decided to leave interest rates unchanged with the baseline rate at 3.5% citing strong economic activity, low job creation and elevated inflation. The committee reiterated that its goals are to achieve maximum employment with an inflation rate target of 2% in the long-run.
Chairman Jerome Powell said that these goals are important to the American people and the Federal Reserve will work towards achieving them. He also said that inflation remains elevated according to the latest PCE reading of 2.8% with PCE for core goods even higher at 3%. He also said that tariffs have contributed to these inflationary pressures especially in the goods sector and the Federal Reserve is also closely monitoring the inflationary effects of the ongoing conflict in the Middle East.
Answering questions to the press, the Federal Reserve chairman defended the central bank’s policy saying that it is ideal for current conditions as moderately restrictive. He also said that the economy is in a unique equilibrium with strong economic growth and no job creation in the private sector.
Chairman Powell also stated that he won’t be resigning pending an investigation against him instituted by President Trump’s Department of Justice over the expenses of the ongoing renovations of the Federal Reserve building is concluded and its results published transparently. A Judge found there were no preliminary grounds for the case to go to Court.
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