The Federal Reserve leaves the main interest rate unchanged for the fifth consecutive meeting

the Federal Reserve On Wednesday, it announced that it would leave the standard interest rate unchanged, as policy makers decided to keep fixed rates amid high economic uncertainty while continuing to monitor inflationary pressures and labor market data.

The Central Bank’s decision leaves the standard federal funds in the range of 4.25 % to 4.5 %, as it remained after the Federal Reserve Policy meetings this year. The central bank reduced interest rates in its last three meetings in 2024, including reduced 50 Basia in September and a 25-Basis discounts in November and December.

The Federal Open Market Committee (FOMC), which directs the movements of the monetary policy of the Central Bank, noticed in its announcement that “modern indicators indicate that growth Economic activity It was managed in the first half of the year. The unemployment rate is still low, and the labor market conditions remain strong. Inflation is still somewhat high. “

FOMC 9-2 voted to leave the prices unchanged, with the opposition of the governors of the Federal Reserve Michelle Bowman and Kristover and Warr from the decision on the basis that they were 25 points to reduce the federal funds rate. One of the conservatives was absent and did not vote at this meeting. This was the first time since 1993 that two FOMC members opposed a modified decision.

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Federal Reserve Chairman Jerome Powell She spoke at a press conference after the decision and said that the central bank focuses on the dual mandate objectives of the maximum employment and stable prices, noting that “despite the high uncertainty, the economy is in a strong position.”

He pointed out that despite today’s report that the gross domestic product in the second quarter has grown at an annual rate of 3 %, the growth of the economy in the first half of 2025 was closed to 1.2 % when it represented a decrease of 0.5 % in the first quarter.

Powell added that the data indicates laboratory It is “widely in balance and is in line with the maximum level of employment,” and while inflation declined from its highest levels in 2022, it is still high for the goal of the Federal Reserve of 2 %.

“The changes in government policies are still developing, and their effects on the economy remain unconfirmed. A higher tariff “It has begun to appear more clearly at the prices of some commodities, but its total effects on economic activity and inflation still can be seen,” Powell explained.

He added: “There is a reasonable essential condition that the effects of inflation can be short -term, which reflects a single -time shift in the price level. But it is also possible that the inflationary effects are more stable, and this is a danger to the evaluation and its management.” “Our commitment is to maintain long -term inflation expectations, and prevent the price level for one time in the price level from the continuous inflation problem.”

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Powell was asked about whether the central bank weighs interest rates in September, as politics will have two other rounds of inflation and labor market data before their next meeting. He answered by noting that FOMC will take this data under study, although not making decisions on future interest rate movements and stressed that the Federal Reserve does not do so in advance.

When asked if the recently announced commercial deals in the Trump administration have added certainty, Powell acknowledged that “a very dynamic time for commercial negotiations” but “we are still far from seeing the place where things settle” because “there are” many uncertainty for a solution. “

The opponents by two conservatives who feed, Bowman and Waller, were the subject of a question posed to Powell, who said: “What you want from everyone, and also from the dissident, is a clear explanation for what you think and what the arguments you offer, and this is what we had today.”

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Powell gave a question about whether September provides adequate time policymakers to judge the effects of definitions on Inflation dataAnd whether this cost of import taxes is transferred to consumers.

“The evidence appears to be not paid mostly – only somewhat driven – through exporters who reduce their price, companies or retailers, individuals and institutions that pass above, and most of this is currently … Consumer pricesAs you know in the June report. “We expect to see more,” said Powell.

“We know from investigative studies that companies feel that they have every intention to put this matter to the consumer. But the truth is, they may not be able to do so in many cases, so we will only have to watch and learn experimentally and learn how much this time period,” he explained.

Edward Lawrence of Fox Business asked about the impact of the Federal Reserve’s monetary policy on the housing market, which slowed down in high Mortgage rates And the narrow offer.

Powell replied, “Housing is a special issue.” “We do not put mortgage rates at the Federal Reserve, as we have put average overnight, and the rates that enter real estate loans are long-term rates such as treasury rates-may be 30 years, and may be shorter than that-but not the federal federal reserve rate. We have no effect, but we are not the main effect.”

“There are other things that happen in Housing sectorOne of them is just a kind of long -term lack of housing. We did not build enough housing. He explained that this is not something that the Federal Reserve can help and this will be the case even after the normalization of things, so I think the best thing we can do for housing is 2 % inflation and maximum employment. “

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Powell was also asked about the president Donald Trump The efforts made to pressure the Powell and Federal Reserve Studies to reduce interest rates and whether its criticisms are at risk of undermining the independence of the central bank to move forward.

“I will only say that I think the presence of an independent central bank was an institutional arrangement that has served the audience well, and as long as it serves the audience well, it should continue and be respected.” “If the audience does not serve well, it should not be something that we should defend automatically.”

“What gives us and has other central banks … is the ability to make these very difficult decisions in ways that focus on advanced data and expectations, the balance of risk, all the things we are talking about, not political factors,” he said.

“Governments all over the developed economist have chosen to put a little distance between direct political control over those decisions and decision makers. If you do not have that, this will be a great temptation, of course, using interest rates to influence the elections, for example, and this is something we do not want to do,” Powell explained. “I think this is widely understood, and certainly it is in Congress, and I mean I think it is very important, I would like it.”

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FOMC will hold its next meeting on September 16 and 17, when price cuts can occur – although the market view of the possibility of a reduction at that time has decreased since the Federal Reserve decision on Wednesday.

“The price committee has spent the stage to take action at the next meeting,” said Jeffrey Roche, the chief financial economist at LPL. “If the economic conditions are weakened, the committee is likely to reduce prices by a quarter of a point in September.”

“The two opposing people were well, but they are definitely two interesting attention in light of the strong, continuous economic data and the strong profit season, indicating that at least two members of the committee may be ready to stop the approach to the dependency of data on the side,” said Sima Shah, the world’s chief strategic expert in the management of the main assets at least.

Shah added: “Moreover, the slightly diligent statement indicates that Waller’s concerns about the weakness of the basic labor market may gain more traction between the committee. It seems that the possibilities are slowly gathering in favor of September discount, but ultimately the incoming job data and inflation prints are still the ones that still carry the key.”

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the The market reaction was To the FOMC advertisement and Powell’s comments that it indicates that the September rate reduction is lower. The CME Fedwatch tool showed the possibility of prices at its current level from 35.4 % a day ago to 51.8 % after the announcement, with a decrease in the probability of 25-basis reduced from 63.3 % to 47.3 % today.