(CN) – The Federal Reserve decided Wednesday not to change its key interest rate, rejecting calls for now from President Donald Trump and others to lower rates to boost economic growth.
The central bank voted 9-1 to leave in place its benchmark rate of 2.25% to 2.5%, which has been in place since December, but signaled it could start cutting rates as the American economy responds to trade disputes and worries about a slowdown.
The key rate influences consumer and business loans, from mortgages to credit cards and home equity lines of credit.
In a statement Wednesday, the Fed said that while rates remain the same for now, it would “act as appropriate to sustain the expansion” as economic “uncertainties” arise.
“Consistent with its statutory mandate, the committee seeks to foster maximum employment and price stability. In support of these goals, the committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent,” the bank said. “The committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased.”
Chairman Jerome Powell had previously said the central bank can be patient with raising interest rates this year while inflation pressures remain tame, as seen in last week’s Labor Department reports on the nearly flat consumer and producer price increases.
But many have called for a cut to interest rates to promote economic growth – including President Trump.
“The United States has VERY LOW INFLATION, a beautiful thing!” Trump tweeted last week as the report on producer prices was released, adding that the Fed’s interest rate is “way too high.”
Some investors say the central bank could make rate cuts as soon as next month.
The economy added a disappointingly low 75,000 new jobs in May. The gross domestic product, a primary indicator of economic health, grew at a 3.1% rate in the first quarter of this year, but economists predict it will slow to 2% or lower for the April-June quarter as effects from the 2017 tax cuts fade.