The Federal Reserve officials in January agreed in January that inflation decreased more before lowering the interest rates and was concerned about the effects that President Donald Trump's tariffs had when the meeting protocol published on Wednesday.
The political decision -makers of the Federal Open Market Committee unanimously decided at the meeting that they hold their most important political set after three consecutive cuts of a full percentage point in 2024.
When achieving the decision, the members commented on the potential effects of the new administration, including chatter on the tariffs and the effects of reduced regulations and taxes. The committee found that the current politics is “significantly less restrictive” than before the tariff cuts, which gives members time for the evaluation of conditions before additional steps have been taken.
The members said that the current policy “has time for the assessment of the developing prospects for economic activity, labor market and inflation, with the vast majority pointing out an even restrictive political attitude. The participants stated that the economy almost maximum employment has remained. make. “
Officials raised concerns that they had the potential for political changes to keep inflation above the goal of the Fed.
The president has already introduced a few tariffs, but in the past few days she threatened to expand her.
In comments on reporters on Tuesday, Trump said that he had 25% tasks on cars, pharmaceuticals and semiconductors that would accelerate in the course of the year. Although he did not deal too far with details, the tariffs would bring trading policy to a different level and the prices would continue to be over at a time when inflation has subsided, but is still above the 2% goal of the Fed.
FOMC members cited “the effects of potential changes in commercial and immigration policy as well as the strong demand from consumers. Business contacts in a number of districts had shown that companies would try to result in higher input costs. Customs. “
They also found that “the risks on the intellation prospects were turned upside down. In particular, the participants cited the possible effects of potential changes in trade and immigration policy.”
Since the meeting, most of the central bank officers have spoken in careful tones about where politics is going from here. Most look at the current rat level in a position in which they can take advantage of the evaluation of the procedures.
In addition to the general focus fed officials who take up employment and inflation, Trump's plans for tax and trade policy have added a wrinkle in the considerations.
On the other hand, in the protocol, “considerable optimism about the economic prospects, some of which are due to the expectation of a relaxation of state regulations or changes to tax policy.”
Many economists expect tariffs that Trump plans to worsen inflation, although the political decision -makers have fed their reaction whether they are one -time increases or whether they would create an underflation that would require a political reaction.
The inflation indicators have been mixed recently, with consumer prices increasing more than expected in January, but the wholesale prices indicate a softer press from pipeline.
The chairman of the Fed, Jerome Powell, has generally avoided speculation on the effects of tariffs. However, other civil servants have expressed concerns and admitted that Trump's movements could affect politics and possibly further delay the interest rate cuts. Market prices are currently expecting the next reduction in July or September.
The Fed benchmark overnight is currently between 4.25%-4.5%.