Banking economists had expected this decision. One of the reasons is the weak labor market, the inflation offered barriers on the way down.
It is the first key interest rate in the USA this year. Most recently, the US Federal Reserve reduced key interest rates in December 2024. The US Federal Reserve is under enormous pressure from US President Donald Trump, who repeatedly demands key interest rates and attacks central bank boss Jerome Powell.
Lena Dräger from the Kiel Institute for the World Economy commented: “From market participants, it was expected that the key interest rate would be reduced by 25 basis points to a range of 4.00-4.25 percent. Such interest reduction can be justified with the dual mandate of the Fed and the weakening of the employment. has been, especially since the risk is that the higher production costs are increasing due to the tariffs.
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Trump consultant in Fed wanted to go down a bigger step
US President Donald Trump had repeatedly asked the independent central bank chief Jerome Powell to strengthen interest. Most recently, he sent his confidant Stephen Miran into the directorate of the central bank in order to fill out a recently vacant position. After his confirmation by the Senate, Trump’s economic advisor was able to vote for the first time in the urgent procedure: he approved an interest step of half a percentage point.
The central bank had pushed the first interest rate down to the long bank in the current year because it first wanted to get an idea of the consequences of the customs policy operated by Trump on business and inflation. After a striking clouding of the labor market, Powell recently posted the signals on interest rate reduction. Because the US Federal Reserve should not only ensure stable prices but also promote full employment.
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Image: (APA/AFP/Mandel Ngan)
Source: Nachrichten
