US Federal Reserve holds rates unchanged as inflation persists - TRT World

BIZTECH 3 min read US Federal Reserve holds rates unchanged as inflation persists Fed chair Kevin Warsh says there is "no magic wand" to lower inflation quickly. Share Warsh insisted the US economy was showing "impressive resilience, with recent shocks." / Reuters Archive The US Federal Reserve has held interest rates steady, with surging inflation fuelled by President Donald Trump's war on Iran seeing three of the committee's 12 policymakers calling for a quarter-percentage-point rate hike. The Fed's open market committee (FOMC) held rates at 3.50-3.75 percent for the fifth straight meeting, with its chairman Kevin Warsh denying that he was reticent to take action against the inflation that has battered US households for more than five years. "We are on the job. We will deliver. We are focused like a laser, making sure we can do it," he said, adding that there was "no magic wand" with which the Fed could lower inflation quickly. Warsh insisted the economy was showing "impressive resilience, with recent shocks." Since taking office, the new Fed chair — who was nominated by Trump, who has demanded lower interest rates — has repeatedly said he wanted a "good family fight" at rate decision meetings. On Wednesday, he said he got one, with three regional Fed presidents dissenting from the majority and recommending the central bank start raising rates now. "Most of our discussion was on the big questions that matter to the conduct of monetary policy. We didn't sort of hide from them. We weren't scared of them," Warsh told reporters. "There was a lot more interaction between and among my colleagues. It was a real family fight." It is rare for that many FOMC members to differ from the majority's vote. RECOMMENDED Türkiye fines Chinese online retailer Temu over obstructing site inspection BMW plans to cut 8,000 German jobs by the end of 2027 China calls US ban on foreign-made humanoid robots ploy to suppress its technology Türkiye, Iraq reaffirm commitment to $30B trade target RECOMMENDED Türkiye fines Chinese online retailer Temu over obstructing site inspection BMW plans to cut 8,000 German jobs by the end of 2027 China calls US ban on foreign-made humanoid robots ploy to suppress its technology Türkiye, Iraq reaffirm commitment to $30B trade target Related TRT World - US Senate confirms Kevin Warsh as Federal Reserve chair, succeeding Jerome Powell Old guard worried They are not the only ones flagging the potential need to address inflation using rate hikes. In addition to the three dissenters, Fed Governors Christopher Waller and Lisa Cook have also signalled their concern in recent weeks. "We may have a new chairman, but the old guard is now worried about where the economy has moved since the beginning of the year," said Diane Swonk, chief economist at KPMG, ahead of the decision. Most investors expected the Fed to hold rates steady, according to CME's FedWatch monitoring tool, but bets on a rate-hike rose significantly in the days leading up to the meeting. Consumer inflation eased to 3.5 percent year-on-year last month, but is expected to rise again on the back of seesawing oil prices from Trump's war on Iran, which has seen renewed fighting in recent weeks. The Fed has a dual mandate to keep inflation to its long-term, two-percent target while ensuring maximum employment in the world's largest economy. Its main tool to achieve this is setting the key interest rate. Raising it tends to constrain economic activity, while lowering it can spur employment but also lead to higher inflation. Wednesday's decision leaves rates unchanged, meaning nine policymakers see the current rate as having the appropriate effect on economic activity. SOURCE : TRT World & Agencies RECOMMENDED Türkiye fines Chinese online retailer Temu over obstructing site inspection BMW plans to cut 8,000 German jobs by the end of 2027 China calls US ban on foreign-made humanoid robots ploy to suppress its technology Türkiye, Iraq reaffirm commitment to $30B trade target RECOMMENDED Türkiye fines Chinese online retailer Temu over obstructing site inspection BMW plans to cut 8,000 German jobs by the end of 2027 China calls US ban on foreign-made humanoid robots ploy to suppress its technology Türkiye, Iraq reaffirm commitment to $30B trade target Explore Israel funded $46.5M campaign to shape AI responses on Gaza war: report New Trump policy could send asylum seekers directly into deportation proceedings Ukrainian drone attack forces evacuation of Russia's Wildberries warehouse China calls US ban on foreign-made humanoid robots ploy to suppress its technology Telegram founder Durov charged with aiding terrorism in Russia Illegal Israeli settlers torch home, abduct 2 Palestinians in occupied West Bank H5 bird flu 'likely' spreading locally in Australia after 11 new suspected cases reported Trump agrees to grant Ukraine Patriot missile system licences: Zelenskyy Fringe Israeli settler group crosses into Syria to establish illegal Jewish outpost South Korea completes homegrown KF-21 fighter jet development in key defence milestone US Democratic senators press administration over possible federal presence at polling sites Venezuela protests Iranian foreign minister's remarks, summons ambassador Japan earthquake kills at least 13 as rescuers search for survivors Ukrainian drone attack kills three in Russia's Belgorod region — authorities Iran fires missiles at US base in Jordan, interceptions thwart attack