Fed Keeps Interest Rates Steady Despite Political Pressures
With U.S. inflation at 1.6 percent for Q1 2019, the Federal Reserve continues to hold off on any interest rate changes following last week’s meeting of the Fed’s Open Market Committee. With both President Trump and Vice President Pence urging the Fed to cut interest rates, the central bank is working to convince observers that its goal is to see price and wage increases without the expectation of rate cuts. Fed Chairman Jerome Powell said the Fed, as a nonpolitical institution, would not be swayed by pressure from the White House.
Powell said he expects price gains to emerge eventually. U.S. employers added 263,000 jobs in April, resulting in a 3.6 percent unemployment rate. If the labor market continues to tighten, employers may raise wages to attract talent, while consumer demand may allow companies to raise prices. Both are slow to appear at this time.
Economists agree that today’s job boom and low inflation seem unlikely, as low unemployment tends to slow the rate of job creation. For now, however, it appears that the Q4 2018 fears of an economic slowdown were unfounded.
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