Despite pressure from President Donald Trump to lower interest rates, Federal Reserve officials are signaling a cautious approach to any potential rate cuts before September. The Fed's stance comes amid ongoing uncertainties surrounding U.S. trade policies and the recent downgrade of the U.S. sovereign credit rating by Moody's.
John Williams, President of the Federal Reserve Bank of New York, emphasized the need for a comprehensive understanding of the economic situation before any rate changes. Speaking at a Mortgage Bankers Association conference, Williams noted the complexities brought on by the Trump administration's policy shifts, highlighting that the U.S. economy requires time to adjust to these uncertainties.
Williams reassured that the U.S. Treasury market remains stable, despite rumors concerning the status of U.S. dollar assets. He pointed out that foreign capital inflows into the Treasury market have not shown significant changes and that core bond markets continue to function efficiently.
With the Federal Reserve maintaining its benchmark interest rate between 4.25% and 4.50% since last December, upcoming Federal Open Market Committee (FOMC) meetings are critical for any future rate decisions. Current market expectations, as gauged by the CME FedWatch Tool, suggest a high probability of maintaining current rates through July, with potential changes anticipated by September.
Raphael Bostic, President of the Federal Reserve Bank of Atlanta, echoed a preference for stability in interest rates, suggesting a single rate cut might be sufficient this year, given the balance of inflationary pressures and recession fears. Bostic emphasized the need to monitor trade negotiations and the effects of the credit rating downgrade over the next several months.
Neel Kashkari of the Minneapolis Fed and Fed Vice Chair Philip Jefferson both advocated for a measured approach, emphasizing the importance of assessing new information before making policy shifts. Jefferson, in particular, underlined the necessity of evaluating the impact of the credit rating downgrade within the broader context of the Fed's economic objectives.
President Trump has been vocal about his desire for the Fed to lower interest rates, drawing comparisons to monetary policies in Europe and China. However, Fed officials remain committed to a data-driven approach, focusing on economic stability and informed decision-making as they navigate these complex challenges.
Copyright ⓒ 뉴스로드 무단 전재 및 재배포 금지
