Updates with additional comments.
Federal Reserve policymakers kept the target interest rate flat today for a fifth time this year, repeating they will "carefully assess" the impacts of tariffs and other policies and risks before making adjustments to the rate.
The Fed's Federal Open Market Committee (FOMC) held the federal funds rate unchanged at 4.25-4.50pc. The FOMC has held the target rate unchanged this year after three rate cuts late last year brought the rate down by 1 percentage point from a two-decade high, which was aimed at bringing down inflation that surged during the post-Covid economic reopening.
"The labor market looks solid, inflation is above target, and even if you look through the tariff effects, we think it's still a bit above target," Fed chief Jerome Powell said in a press conference. "And that's why our stance is where it is."
Powell added that "changes to government policies continue to evolve, and their effects on the economy remain uncertain. Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen."
Policymakers, in their statement, said they would "carefully assess incoming data, the evolving outlook and the balance of risks" ahead of any future rate adjustments.
Earlier Wednesday, the Bureau of Economic Analysis reported US economic growth expanded by an annual 3pc in the second quarter, following a 0.5pc annual contraction in the first quarter that had raised alarm the US may be entering a recession. Growth in the second quarter was powered by a sharp decline in imports, which boosted growth, and more spending by consumers as they awaited the full impacts of President Donald Trump's tariffs and other policies to filter down to the economy.
Asked about Trump's efforts to intimidate him into lowering rates or even resigning, Powell replied: "I think that having an independent central bank has been an institutional arrangement that has served the public well. And as long as it serves the public well, it should continue and be respected."
Trump had recently escalated his public attacks on Powell, saying he was doing a "terrible job" for not allowing the Fed to lower its target rate this year after cutting three times in the final days of former president Joe Biden.
"He's always been too late," Trump said of Powell at a press conference on 16 July. "He should have cut rates a long time ago."
By Bob Willis
