Mumbai: In view of the uncertain trade policy of US President Donald Trump and the Tariff War, the Open Market Committee of the Federal Reserve kept the major interest rate unchanged at the end of the two -day meeting and reduced its estimates of US economic growth, as well as indicating an increase in inflation.
The Federal Reserve has kept the benchmark rates unchanged within 4.25 percent to 4.50 percent. The statement issued by the Fed stated that the assessment will be done based on the balance of the figures, emerging landscapes and risks.
The Federal Reserve has estimated that the US economic growth rate will be 1.70 percent this year and inflation will increase to 2.70 percent. Earlier the economic growth rate was estimated at 2.10 percent.
However, recent indicators indicate that economic activity is moving firmly. The statement also said that the unemployment rate has become stable at a low level.
At the end of the two -day meeting, Federal Reserve Chairman Jerome Powell told reporters that Trump’s plan to impose heavy tariffs on goods coming from US business partners has influenced the Federal Reserve approach for inflation and economic development.
Such measures will increase inflation and affect development. Powell clarified that the Federal Reserve is not in a hurry to change interest rates in view of the extraordinary increase in uncertainty.
The Federal Reserve has long been trying to bring inflation to two percent level in the United States. To put pressure on it following the decision of the fed to keep the interest rates unchanged, Trump in a message asked the fed to reduce the repo rate to balance his plans of the new tariff.
However, Fed has upheld its expectation to cut interest rates twice this year.
