By Marta Garde
Washington, May 7 (EFE) – The United states Federal Reserve did not give in to pressure from President Donald Trump to lower interest rates, announcing on Wednesday that it would maintain the current range.
The Federal Open Market Committee (FOMC), responsible for setting monetary policy, indicated at the end of its third meeting in 2025 that it would keep interest rates in the 4.25% – 4.5% range.
Fed Chairman Jerome Powell later noted at his regular press conference that while the tariff increases will likely lead to higher inflation, slower economic growth, and higher unemployment, the economy remains solid.
“The labor market is solid, inflation is low, we can afford to be patient as things unfold, there’s no real cost to our waiting at this point,” Powell said.
The disagreement between Powell and Trump began before Jan. 20, when Trump accused the Fed of acting too late, claimed to know more than Powell, and even threatened to fire him, which is not allowed by law.
Although Trump abandoned the threat of firing him because Powell’s term ends in 2026, the president has not stopped his efforts to demand further rate cuts.
“We are always going to do the same thing, which is we are going to use our tools to foster maximum employment and price stability for the benefit of the American people,” Powell said, referring to the president.
“We are always going to consider only the economic data, the outlook, the balance of risks, and that’s it. That’s all we are going to consider,” he added.
US GDP contracted 0.3% in the first quarter at an annualized rate and 0.1% from the previous quarter, the first negative figure since 2022, but Powell noted that although people are worried about the impact of the tariff dispute, it has not yet arrived.
Unemployment remained at 4.2%, the same as in March, while prices fell 0.1%, their first monthly decline since May 2020, leaving year-on-year inflation this month at 2.4%.
As usual, the Fed insisted it would closely monitor incoming information and “adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” as well as maximum employment and 2% inflation.
“If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” Powell concluded, stressing that the negotiation of trade agreements to put an end to this situation is not within his competence. EFE
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