The Federal Reserve has left US interest rates on hold, halting a cycle of cuts and resisting calls from US president Donald Trump for deep reductions in borrowing costs.
Following a two-day meeting, the US central bank on Wednesday held its main interest rate at 4.25 per cent to 4.5 per cent.
Rate-setters on the Federal Open Market Committee (FOMC) said in a post-vote statement that US inflation remained “somewhat elevated” and removed an earlier reference noting “progress” towards hitting their 2 per cent goal.
The decision to hold rates, which was unanimous, comes just days after Mr Trump insisted that borrowing costs should fall “a lot” and vowed to “let it be known” if he disagreed with the central bank’s decision-making.
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The FOMC’s January pause followed three consecutive cuts – including a bumper 0.5 percentage point move in September – which took the federal funds target range down from what was then a 23-year high of 5.25 per cent to 5.5 per cent to its current level.
As the Fed was holding steady on rates Howard Lutnick, President Donald Trump’s nominee to lead the commerce department, offered a detailed defence of tariffs in his confirmation hearing, the clearest signal yet from a cabinet pick that the new administration is prepared to impose the levies on allies and adversaries alike.
The Wall Street veteran, appearing before the Senate Committee on Commerce, Science, and Transportation, detailed several goals he expects tariffs to achieve, from bolstering national security to restoring American manufacturing and supply chains. He also called them an effective negotiating tactic that will force other countries to again “respect” the US.
Mr Lutnick brushed aside worries that tariffs would drive inflation higher as “nonsense,” while conceding prices of some products might go up. Asked if US tariff policy would distinguish between friends and foes, he said China should face the stiffest duties overall but that allies won’t be spared. – Copyright The Financial Times Limited 2024/Bloomberg
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