Federal Reserve chair Jerome Powell says there is no bias to either tighten or ease monetary policy
US Federal Reserve chair Jerome speaks during a press conference in Washington, DC, the US, May 1 2019. Picture: ANNA MONEYMAKERS/BLOOMBERG
After raising the key lending rate four times last year, the Fed voted unanimously to keep it in a range of 2.25%-2.5%. Conflicting economic data have complicated the Fed’s decision-making, while repeated attacks by President Donald Trump have left the institution open to concerns it might bow to political pressure.
And he defended the committee’s actions to date, saying they were not responsible for low inflation which in part is due to factors that “appear to be transient or idiosyncratic.” But he said policymakers will be “watching inflation carefully”. Powell also again stressed that the Fed does not respond to political pressure.
But the FOMC also noted growth in household spending and business fixed investment “slowed in the first quarter”, and that key inflation measures “have declined and are running below 2%”. There also was one shift: a small reduction on interest paid to banks on cash reserves to 2.35% from 2.4%. Powell called it just a “technical fix” to the mechanism for controlling policy.
In the first two meetings of the year, central bankers had made it clear they planned to hold off on any further moves until there were clear signs of the direction of the economy.But central bankers have been baffled that wages and prices have shown few signs of taking off, even with unemployment at historic lows, companies nationwide complaining of struggles to find workers, and solid GDP growth of 3.2% in the first three months of 2019.
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