Washington DC [US], June 19 : The US Federal Reserve on Wednesday decided to keep benchmark interest rate unchanged at a range of 4.25 to 4.5 percent, amid ongoing trade policy shifts and growing pressure from President Donald Trump, The Hill reported.
Fed officials reiterated the overall strength of the US economy, citing declining inflation and consistently low unemployment. The unemployment rate has held steady at 4.2 percent over the past three readings, with around 7 million people currently unemployed in a labour force of 170 million, the report said.
It said inflation slightly increased in May, with the consumer price index (CPI) rising at a 2.4 percent annual rate, compared to 2.3 percent in April. The personal consumption expenditures (PCE) price index--the Fed's preferred inflation metric--slowed to a 2.1 percent increase in April, bringing it closer to the Fed's 2 percent target.
Many economists and businesses have been warning of higher prices due to President Trump's tariffs, which have raised the overall US tariff rate to the highest level in nearly 100 years. So far, however, they have yet to show up conclusively in the price data, the report said.
President Trump has continued to push the Fed to resume interest rate cuts, which were paused in January following a brief inflation uptick. He recently called Fed Chair Jerome Powell a "numbskull" for maintaining the pause, warning that it would increase interest costs on the national debt--already exacerbated by Republican tax and spending cut proposals under consideration in Congress, The Hill reported.
Despite Trump's criticism, market analysts widely expected the Fed to hold rates steady..
The report said that escalating tension in the Middle East, following Israeli strikes on Iran's nuclear facilities and targeted assassinations of Iranian officials, has complicated the Fed's policy calculus.
Oil prices surged last week, with Brent crude reaching $76.45 per barrel on Monday--its highest since February.