US stays on track for autumn rate rise despite Trump fears
THE US Federal Reserve has kept interest rates unchanged, as expected, remaining on course to deliver a hike in September, in a sign that the central bank will not bow to pressure from President Donald Trump.
The Fed’s rate-setting Federal Open Market Committee (FOMC) held the range of its Federal Funds Rate at 1.75pc to 2pc, given the “realised and expected labour market conditions and inflation”.
It signalled to the low level of unemployment in the country, at about 4pc in June, and said job gains had been strong in recent months.
Meanwhile, both household spending and business fixed investment had “grown strongly”, and inflation for items, excluding food and energy, remains near its 2pc target.
The FOMC said it expects “further gradual increases … consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the committee’s symmetric 2pc objective over the medium term”.
Richard Carter, of Quilter Cheviot, said although the US economy was “firing on all cylinders, a rate hike from the Fed was never on the cards”. He said the central bank was likely to hike in September, and then possibly again in December.
The comments come less than two weeks after Mr Trump hit out at the Fed’s strategy of raising interest rates, saying they were “taking away our big competitive edge”. In a post on Twitter, Mr Trump said: “The United States should not be penalised because we are doing so well. Tightening now hurts all that we have done.
“The US should be allowed to recapture what was lost due to illegal currency manipulation and bad trade deals. Debt coming due and we are raising rates – really?”
The White House later clarified that the president was not seeking to interfere with policy decisions.