US Federal Reserve raises rates despite pressure from Trump
Fed chairman Jerome Powell says US economy may be softening
The US Federal Reserve has raised interest rates again, following a two-day meeting to discuss the state of the US economy.
The move, which adds 0.25% to official interest rates aiming to reach a target between 2.25% and 2.5%, came despite unprecedented public lobbying by Donald Trump, who had pre-emptively called a rate rise “foolish” and “crazy”.
“Presidents generally avoid criticising the bank publicly, for fear of politicising the institution,” the BBC says.
Trump had, on Tuesday, taken to Twitter to urge the Federal Reserve not to make “yet another mistake”, and to “feel the market, don’t just go by meaningless numbers”.
The Washington Post reports that “investors hit the sell button shortly after the Fed’s announcement”, with the Dow Jones industrial average dropping sharply to close 350 points down for the day, leading other global markets down as well.
The market reaction came despite assurances from Federal Reserve chairman Jerome Powell that the US economy was in relatively good shape.
“Despite this robust economic backdrop and our expectation for healthy growth, we have seen developments that may signal some softening,” Powell said.
However, Powell also said there was a “fairly high degree of uncertainty” about what the Fed’s next steps will be, with most analysts agreeing that the expected number of rate rises in 2019 will be reduced from three to two.