Zürcher Nachrichten - US Fed pauses rate cuts, resisting Trump pressure

EUR -
AED 3.848773
AFN 76.563164
ALL 98.747073
AMD 417.235293
ANG 1.881762
AOA 958.249082
ARS 1106.787419
AUD 1.646493
AWG 1.88615
AZN 1.786011
BAM 1.950822
BBD 2.10822
BDT 126.866261
BGN 1.954947
BHD 0.394929
BIF 3091.651672
BMD 1.047861
BND 1.400898
BOB 7.21459
BRL 5.991145
BSD 1.044116
BTN 90.521007
BWP 14.401974
BYN 3.417015
BYR 20538.076651
BZD 2.097348
CAD 1.48691
CDF 3003.169277
CHF 0.944469
CLF 0.025795
CLP 989.90408
CNY 7.601234
CNH 7.610662
COP 4322.950777
CRC 529.438865
CUC 1.047861
CUP 27.768318
CVE 109.98434
CZK 25.037276
DJF 185.935527
DKK 7.459901
DOP 64.90314
DZD 141.21819
EGP 53.025065
ERN 15.717916
ETB 133.737175
FJD 2.405103
FKP 0.842118
GBP 0.831734
GEL 2.960215
GGP 0.842118
GHS 16.131835
GIP 0.842118
GMD 74.919128
GNF 9026.793014
GTQ 8.060431
GYD 218.45255
HKD 8.152144
HNL 26.618566
HRK 7.570876
HTG 136.620067
HUF 401.51205
IDR 17003.117387
ILS 3.725229
IMP 0.842118
INR 91.038326
IQD 1367.809604
IRR 44101.852915
ISK 146.906717
JEP 0.842118
JMD 164.87612
JOD 0.743453
JPY 158.768244
KES 135.378567
KGS 91.635274
KHR 4180.332569
KMF 491.028196
KPW 943.16932
KRW 1512.230823
KWD 0.323234
KYD 0.87008
KZT 519.115314
LAK 22692.094
LBP 93500.319992
LKR 308.582555
LRD 208.308436
LSL 19.186041
LTL 3.094061
LVL 0.633841
LYD 5.122927
MAD 10.424199
MDL 19.525175
MGA 4918.355398
MKD 61.481937
MMK 3403.411828
MNT 3626.806277
MOP 8.371039
MRU 41.566138
MUR 48.505124
MVR 16.133709
MWK 1810.345781
MXN 21.392565
MYR 4.646171
MZN 66.960156
NAD 19.186041
NGN 1582.070835
NIO 38.421223
NOK 11.648589
NPR 144.830655
NZD 1.826974
OMR 0.403447
PAB 1.044136
PEN 3.879301
PGK 4.199204
PHP 60.805803
PKR 291.453783
PLN 4.159304
PYG 8227.006211
QAR 3.806487
RON 4.977094
RSD 117.112121
RUB 96.141249
RWF 1464.933801
SAR 3.930098
SBD 8.836315
SCR 15.079281
SDG 629.764602
SEK 11.217133
SGD 1.405407
SHP 0.863005
SLE 23.839029
SLL 21973.128272
SOS 596.666031
SRD 36.908808
STD 21688.608187
SVC 9.135687
SYP 13625.354097
SZL 19.181868
THB 35.322374
TJS 11.396718
TMT 3.667514
TND 3.305964
TOP 2.454196
TRY 37.962235
TTD 7.085918
TWD 34.293874
TZS 2724.439076
UAH 43.447401
UGX 3842.195432
USD 1.047861
UYU 45.354264
UZS 13566.38112
VES 64.95362
VND 26702.119299
VUV 129.581899
WST 2.973169
XAF 654.274924
XAG 0.032323
XAU 0.000362
XCD 2.831897
XDR 0.799445
XOF 654.274924
XPF 119.331742
YER 259.869291
ZAR 19.317313
ZMK 9432.004434
ZMW 29.418928
ZWL 337.410832
  • RELX

    -0.8400

    51.07

    -1.64%

  • NGG

    -0.5400

    60.73

    -0.89%

  • SCS

    -0.0700

    12.35

    -0.57%

  • GSK

    -0.3800

    36.17

    -1.05%

  • VOD

    -0.0700

    8.36

    -0.84%

  • RYCEF

    0.0200

    7.84

    +0.26%

  • CMSC

    0.0900

    23.5

    +0.38%

  • RBGPF

    63.5700

    63.57

    +100%

  • CMSD

    0.1872

    23.69

    +0.79%

  • BCC

    1.0300

    121.63

    +0.85%

  • RIO

    0.0700

    63.36

    +0.11%

  • BCE

    0.1900

    23.82

    +0.8%

  • AZN

    -0.8700

    73.58

    -1.18%

  • BTI

    -0.7900

    38.82

    -2.04%

  • JRI

    0.0435

    12.83

    +0.34%

  • BP

    0.5100

    35

    +1.46%

US Fed pauses rate cuts, resisting Trump pressure
US Fed pauses rate cuts, resisting Trump pressure / Photo: ANDREW CABALLERO-REYNOLDS - AFP

US Fed pauses rate cuts, resisting Trump pressure

The US Federal Reserve left its key lending rate unchanged Wednesday, resisting pressure from President Donald Trump to continue with cuts in the first rate decision since his return to office.

Text size:

Policymakers voted unanimously to keep the Fed's benchmark lending rate at between 4.25 percent and 4.50 percent, the Fed announced in a statement.

The decision marked a pause following three consecutive rate reductions which lowered the Fed's key lending rate by a full percentage point.

"The unemployment rate has "stabilized at a low level in recent months, and labor market conditions remain solid," the Fed said.

It added that inflation "remains somewhat elevated," while removing a reference in earlier statements to inflation making progress towards the bank's long-term target of two percent.

The US central bank has a dual mandate from Congress to act independently to tackle inflation and unemployment.

It does so primarily by raising or lowering its key short-term lending rate, which influences borrowing costs for consumers and businesses.

Most analysts agree that the US economy is going fairly well, with robust growth, a largely healthy labor market, and relatively low inflation which nevertheless remains stuck above the Fed's target.

Ahead of Wednesday's decision, the financial markets priced in a roughly 70 percent chance that the Fed would extend its pause at the next rate meeting in March, according to data from CME Group.

- 'Definitely inflationary' -

Since returning to office on January 20, Trump has revived his threats to impose sweeping tariffs on US trading partners as soon as this weekend and to deport millions of undocumented workers.

He has also said he wants to extend expiring tax cuts and slash red tape on energy production.

Last week, Trump also revived his criticism of the independent Fed and its chair Jerome Powell, whom he first appointed to run the US central bank.

"I'll demand that interest rates drop immediately," he said, later adding that he would "put in a strong statement" if the Fed did not take his views on board.

Most -- though not all -- economists expect Trump's tariff and immigration policies to be at least mildly inflationary, raising the cost of goods faced by consumers.

"I think those policies are definitively inflationary, it's just a question of what degree," said Zandi from Moody's Analytics.

"A big part of (the Fed's) job in calibrating monetary policy is responding to what lawmakers are doing, and if they can't get a fix on what they're doing, then that just argues for no change in policy, either higher or lower rates," he added.

- 'Meaningful odds' -

At the Fed's previous meeting, policymakers dialed back the number of rate cuts they expect this year to a median of just two, with some incorporating assumptions about Trump's likely economic policies into their forecasts, according to minutes of the meeting.

Given the uncertainty about the effect of Trump's policies on the US economy, analysts are now divided over how many rate cuts they expect the Fed to make this year.

In a recent investor note, economists at Goldman Sachs said their baseline forecast was for two quarter-point cuts, assuming a mild, one-time effect on inflation, "causing it to fall by less but not to rise and leaving the door open to rate cuts."

"We retain our baseline that the FOMC will cut rates 25bp (basis points) this year, in June," economists at Barclays wrote, pointing to the underlying strength of the economy.

Zandi from Moody's Analytics said he also expects two rate cuts later in the year.

But, he added, "there are meaningful odds that the next move by the Fed may not be a rate cut, it might be a rate increase."

A.Weber--NZN