The US Federal Reserve met expectations and approved another interest rate cut on Wednesday. This is a quarter-point reduction, decided at the last meeting of the year of the Federal Market Committee. … Open, the Fed body that makes these monetary decisions.
This is the third consecutive cut approved at these Fed meetings, which leaves rates at the thresholds of 3.5% and 3.75%. This comes amid continued pressure from US President Donald Trump for the central bank to accelerate rate cuts to fuel the economy of the world’s leading power, which has become one of the problems of his second term.
The persistence of pressures on prices, with latest inflation data located at 3%, raised questions about how much further the Fed should cut rates and whether the U.S. economy is at risk of overheating.
These doubts are by no means unanimous within the Fed. division and polarization who dominate the American political and social scene also invaded the central bank, in the midst of Trump’s attack against one of its great pillars, independence.
This was also seen at this latest meeting, where seven of the 19 committee members predicted that there will be no rate cut next yearwhile eight deputies defend that next year there will be at least two reductions.
In recent months, the US president has managed to place close numbers among Fed governors and there is an unknown division in the decision-making process. Among them, Stephen Miran, who remains an advisor to Trump, and who defended during the meeting that rates should go down to 2% next year.
In the background there is also the replacement of the current president of the Fed, Jerome Powell, and the ability that his replacement will have to maintain his independence in the face of demands coming from the White House.
After being constantly attacked and insulted by Trump for his resistance to lowering rates when the president demanded it, Powell will step down as chairman next May. The New York billionaire is already in the final talks with the candidates for his replacement. First among the candidates is Kevin Hassett, Trump’s adviser as director of the National Economic Council.
Hassett has argued that he will be independent of the demands of political power, but Trump has made clear that he will only put someone at the helm of the Fed who will comply with his low-rate policy orders.
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