The American Federal Reserve (Fed) fell on Wednesday its interest rates for the first time of the year, in a proportion considered too shy by the new governor, only promoted by Donald Trump, who suggested a more marked decrease.
The Central Bank of the United States has undoubtedly decreased its guide rates by a quarter of a percentage. Now they are between 4% and 4.25%, they are still much higher than the US president wants.
The Fed “was right to wait” before reducing its rates and is “firmly determined to preserve (its) independence,” said President Jerome Powell on Wednesday. The monetary institution has been in a hurry for several months by US President Donald Trump to reduce his rates, but monetary relaxation did not begin until Wednesday due to the risks weighing in the labor market.
Only an official voted against this decision: Stephen Miran, who joined the Fed only on Tuesday, designated by Trump, and wanted to see that interest rates decrease at half a point.
An increase in growth forecasts
Fed officials have also shown a little more optimistic about American growth: now they see it at 1.6% at the end of the year, against 1.4% at the time of their June forecasts. However, this still represents a strong deceleration compared to the growth recorded in 2024 (+2.8%).
They recognize in parallel a degradation of conditions in the labor market in their press release. “Employment creations have slowed down, the unemployment rate has progressed but is still low,” they write at the end of two days of monetary policy.
According to the median of their forecasts, two other rates falls anticipate (a quarter of each) in 2025, which would imply a new relaxation in each of the meetings scheduled by the end of the year.
Last year, at the same time, the Fed had reduced its half -point rates at the same time, then a quarter of a point in November and a quarter of a point in December. Then he put everything in the break, arguing that the uncertainty about the consequences of Donald Trump’s policies was too strong to determine the direction of the economy and the appropriate monetary response.
Exciting
In recent times in the United States, the monetary strategy, generally related to an academic and felt world, has passed to the political saga and the judicial chronicle.
Stephen Look, the governor who voted against Wednesday’s decision, has just been placed in the Fed by President Trump, of which he is one of the faithful. Confirmed on Monday of protecting by the Senate with a republican majority as governor and member of the monetary policy committee, Stephen Miran swore just before the beginning of Tuesday’s meeting.
He said to the senators that he would sit independently. He also warned that he would not give up his position to the head of the White Economic Advisors (CEA) Committee, but he would only take a pay without pay, his mandate in the Fed does not have to last a few months. Maintaining this link with the presidency has rebelled the democratic opposition, for whom only Donald Trump’s mandates will apply to reduce rates.
The US president has been demanding a massive fall in guidance rates for months and has tried to make Jerome Powell leave. He also tried, in vain, to prevent Governor Lisa Cook from feeling this week.
Accused by the presidential camp of having lied to banks to obtain personal real estate loans, Lisa Cook faces Donald Trump in the Court to stay in place. The White House has sworn to take the case to the Supreme Court, of which Donald Trump consolidated the conservative majority during his first term. In the Fed, it is a total of twelve people who vote in interest rates.
Source: BFM TV
