The US Federal Reserve held interest rates steady on Wednesday, resisting intensifying political pressure from President Donald Trump, even as new economic data revealed stronger-than-expected headline growth.
The Federal Open Market Committee (FOMC) voted to keep its benchmark rate in the range of 4.25 to 4.5 per cent, a level it has maintained since December. While widely expected, the decision drew immediate fire from Trump, who had earlier urged the central bank to cut borrowing costs following a 3% annualised GDP rebound in the second quarter.
Using his favoured nickname for Fed Chair Jerome Powell, Trump posted on social media: “WAY BETTER THAN EXPECTED! ‘Too Late’ MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!”
The Fed’s post-meeting statement reiterated its data-dependent approach, stating it would adjust monetary policy if necessary to “impede the attainment of the committee’s goals.” It acknowledged moderating growth, persistent inflation concerns, and global developments as key inputs to future decisions.
While the headline GDP figure appeared strong, analysts were quick to note that much of the gain was due to a sharp drop in imports, which flattered the overall number. Measures of consumer spending and business investment, by contrast, slowed significantly. A separate Commerce Department gauge of core domestic demand fell from 1.9% to 1.2%, raising concerns that the economy is losing momentum beneath the surface.
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