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Anticipated Federal Meeting Set to Transpire

Fed Resists Trump's Influence, Upholds Monetary Policy Independence to Combat Inflation

Anticipated Federal Meeting set to ensue
Anticipated Federal Meeting set to ensue

Anticipated Federal Meeting Set to Transpire

Keeping It Cool at the Fed: No Rate Cut in Sight

The much-awaited two-day June meeting of the U.S. Federal Reserve in Washington is underway, and it's clear that there's a slim chance of an interest rate cut. The futures market gives this move a mere 1% likelihood. So, it’s safe to say the Fed's withstanding remarkable political pressure coming from President Donald Trump, who doesn't hesitate to call Fed Chairman Jerome Powell names like "idiot" and worse.

Despite the limelight's harsh glare, inflation remains recalcitrant, persistently hovering above the Fed's 2% target. This stagnation underscores the Fed's rate pause, a direct response to the inflationary trend.

Trade Wars and Market Uncertainty

But Trump's trade policies are stirring uncertainty, causing turbulence in global markets. The imposed tariffs and the chaos surrounding their implementation have alarmed the Fed. Concerns abound that further tariff announcements could exacerbate the situation, driving prices up.

Jerome Powell, appointed by Trump in 2017, has stood firm against preventive measures. In his latest statement, he emphasized, "We don't feel like we need to rush."

  • Trump's vocal criticism piles pressure on Powell
  • JPMorgan CEO Dimon issues a warning: Stagflation looms!
  • Fed vs. White House: Powell resists Trump's pressure
  • Trump brands Powell "a fool" post rate decision

Maintaining Independence and Credibility

Although the stock market has started to recover, the U.S. GDP shrank slightly in the first quarter and might record a decline in the second one. Job growth remains modest, while consumer sentiment remains shaky, showing slight improvement but staying fragile.

For Powell and his colleagues, the Fed's credibility as an unbiased, non-political institution is paramount. They argue that a premature interest rate cut could jeopardize their reputation more than any social media post from the President.

The broader market seems to concur with this analysis. When Trump hinted at dismissing Powell a few months ago, stock prices dropped significantly, with the Dow Jones losing over 1,000 points in a single day.

In its battle against inflation, the Fed isn't ready to throw in the towel easily. The current interest rate range of 4.25 to 4.50 percent is unlikely to change after today's decision, expected at 8:00 PM our time. Stay tuned for updates with DER AKTIONÄR.

Worth Noting:

  • Despite some recession fears, the Fed maintains a cautious approach to monetary policy, focused on monitoring inflation and economic activity for further decisions[1][2][4].
  • The current interest rate stance allows the Fed to react flexibly to potential changes in economic conditions and inflation[2][4].
  1. The vocal criticism from President Trump piles pressure on Fed Chairman Jerome Powell, while the ongoing trade wars stir uncertainty in global business and finance, potentially driving prices up.
  2. The Fed is conscious of maintaining its independence and credibility as an unbiased institution, as a premature interest rate cut could jeopardize its reputation more than any social media post from the President, given the broader market's response to potential political interference.

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