The US Federal Reserve has left interest rates unchanged, maintaining the interbank rate at 4.25%-4.5%. This decision comes amid pessimistic inflation forecasts.
Fed's Decision and Its Consequences
On Wednesday, the US Fed announced that interest rates remained at 4.25%-4.5%, marking the seventh consecutive meeting. According to new projections, core inflation, excluding food and energy, is expected to rise to 3.1% by year-end, higher than the March forecast of 2.8%.
Escalating Conflict Between Trump and Powell
US President Donald Trump has stated his intention to name a successor to Jerome Powell, whose term ends in 2026. During his campaign, Trump expressed dissatisfaction with the Fed's actions, stating, 'We have a stupid person at the Fed.'
Minimizing the Risk of Losing Fed Independence
Analysts warn that appointing a Fed chair seen as loyal to Trump could undermine the central bank's independence. This could lead to a decline in public confidence in the Fed and increased market volatility. Economic stability relies on an impartial approach to monetary policy.
Overall, the independence of the Fed is critical for economic stability. Inflation forecasts and the potential appointment of a new chair remain central concerns for market participants.
