The Federal Preparatory System on Wednesday will announce the latest interest rate levels after President Donald Trump calling to the central bank to lower them.
Investors are widely hoped that the Fed will stabilize interest rates, and have a central bank in a potential collision course with Trump. Independent long -standing norms usually are isolated directly from political interference on central banks.
The decision to maintain the current interest rate has paused the three consecutive interest rates imposed by the Fed over the last few months of 2024.
The Fed shows that the interest rate will be reduced at a slow pace last month, but it refers to a revived inflation game. The market has collected significant losses, but has plunged stock prices due to its prediction.
Inflation has been dramatically slower than 9 % of the peak in June 2022, but the rise in price remains almost higher than the Fed’s target rate of 2 %.
Last week, in a virtual speech to the World Economic Forum in Davos, Switzerland, Trump demanded a decline in interest rates after seeking a reduction in crude oil prices set by a national group known as OPEC, including Saudi Arabia.
According to Trump, the prospect of petroleum prices can retreat the fight against inflation and reduce interest rates.
“I’m going to ask Saudi Arabia and OPEC to reduce the cost of oil,” said Trump.
The United States does not belong to the OPEC, and the president has not played a role in determining the oil prices sold by member states.
Several past presidents tried to affect the Fed interest rate policy, including Trump, which repeatedly supported low interest rates during his first term.
Jerome Powell, chairman of the Federal Reserve, will give a lecture at a press conference after the two -day central bank policy meeting held in Washington on December 18, 2024.
Kevin Ramarc/Reuters
In the August campaign trail, Trump said that the US President should play a role in setting interest rates.
FRB Chair Jerome Powell, when asked by Trump, asked him to resign from his standpoint, and struck a rebellious tone in November.
“No,” and Powell told the reporters who blocked the White House at a press conference at Washington DC.
When Trump was asked if he could dismiss or demoted him, Powell said, “Not allowed under the law.”
The Fed retreated in the battle against inflation for the last few months last year, and reduced interest rates. Still, the interest rate of the Fed remains a historic high level from 4.25 % to 4.5 %.
Last month, Powell said that the central bank could proceed at a slow pace with future interest rates.
Powell also stated that the recent resurrection of inflation has influenced the Fed’s expectations, and some policy proprieters considered uncertainty related to potential policy changes under Trump.
“It’s common sense that if the path is uncertain, it will be a little late,” Powell said. “It’s the same as driving on a fog at night or walking around a dark room full of furniture.”
