Brief of diving:
- TThe Federal Reserve maintained the main interest rate on Wednesday in a range of between 4.25% and 4.5%, while foreseeing higher inflation and slower growth for 2025.
- In a median forecast, Fed officials estimated that their preferred inflation measure (the price index of less volatile basic personal consumption expenses) will end the year by 2.8%, 0.3 percentage point higher than their December estimate. Also reduced its forecast for economic growth 2025 to 1.7% of 2.1% in December. FED officials continue to wait at least two cuts of quarter -point in the federal fund rate.
- The rates and other policy changes by the Trump administration have aroused “really high uncertainty,” said Fed President Jerome Powell during a press conference after a two -day policy meeting. “We have rates that enter, we do not know what speed, what speed,” he said. “But we know there will be rates and usually decrease growth; they usually increase inflation in the first case.”
Divide vision:
SFed FED officials last met in January, consumer surveys and economic data have launched alert for increasing risks of inflation and slowing growth.
Reduced consumer expense 0.5% in January and retail sales last month increased by 0.2%lower than expected.
CThe Sumer Feeling has been reduced in recent weeks and higher price expectations have increased, according to the Department of the Council of Conferences and the University of Michigan.
Double risk of weakening growth with increasing inflation – or “stagflation” – It is mainly derived from the policy changes by the Trump administration, including higher rates, widespread layoffs of federal employees and mass deportation plans, according to economists.
“The new administration is in the process of implementing major changes in politics in four different areas – Trade, immigration, fiscal policy and regulation, “said Powell.” It is the net effect of these policy changes that will import to the economy and the path of monetary policy.
“Although there have been recent developments in some of these areas, especially commercial policy, the uncertainty around changes and their effects on economic perspectives are high,” he said. “As we analyze incoming information, we focus on separating the signal of noise” when we consider changes to monetary policy.
President Donald Trump and his highest advisers have said that his initiatives can lead to short-term economic interruption while strengthening American manufacturing and long-term economics.
“The rates are to make the United States return to rich and do America again,” Trump said To his state of the union Direct this month. “There will be a bit of disturbance. We’re OK with that. Not much.”
Last week, Goldman Sachs reduced his forecast for gross growth in the domestic product from 2025 to 1.7% of 2.4% at the beginning of the year.
“Our commercial policy assumptions have become considerably more adverse and the [Trump] The administration manages the expectations for economic induced economic weakness and almost a term, “said Jan Hatzius, a Goldman Sachs chief economist, in a research note.
The United States rate rate will increase 10 percentage points, double the previous forecast of Goldman Sachs and five times more than during the first Trump administration, Hatzius said.
Atlanta Fed on Tuesday expects this Probably gross domestic product will be reduced to an annual rate of 1.8% during the first quarter. The Bank of the Regional Federation on March 7 predicted a contraction of 1.6% during the first quarter.
Powell said he sees the underlying force in the economy.
“Growth seems to be a little moderate, consumers spending is a bit moderate, but still at a solid rate,” Powell said, emphasizing that unemployment is at a relatively low level of 4.1%, with the creation of “healthy levels”.
“Inflation has begun to advance now, we think, in part as a response to the rates, and there may be a delay in more advances this year,” he added, adding “in general, it is a solid image.”
Powell’s comments echoed a post-reunion statement from the Federal Committee of the Open Market.
“Recent indicators suggest that economic activity has continued to expand at a solid rate,” the FOMC said in a statementDespite noting that “inflation is still a bit high” and “Uncertainty about economic perspectives has increased. “”
There has been no sudden sign of prices.
Inflation last month increased than expected, said the Labor Statistics Office last week. After gaining 0.4% in January, the basic consumption price index excluding volatile prices of food and energy increased by 0.2% in FebruaryIt is largely fueled by an increase of 0.3% of the costs of the shelter and an increase of 0.9% of the cars and trucks used.
However, Powell has warned for months that the road goes back to the inflation target of 2% of the FED will probably be unpleasant.
“We see it both in the market -based measures and the survey and respondents, both consumers and companies, mention rates as a common factor beyond the following year,” Powell said, referring to price perspectives. “However, most long -term measures [inflation] The expectations are consistent with our 2% inflation goal. “
Fed officials see no urgency to adjust loan costs and can recalibrate monetary policy to manage the two sides of the Central Bank’s double term to ensure the stability of the price and maximum employment, said Powell.
“We must not be in a hurry to adjust our policy position and we are well positioned to expect greater clarity,” he said.
