Enter your email to get Benzinga’s ultimate morning update: The PreMarket Activity Newsletter
Analysts and experts are reacting to the Federal Reserve keeping its benchmark interest rate unchanged at 4.25% to 4.50% on Wednesday’s Federal Open Market Committee Meeting, amid mounting pressure from President Donald Trump to deliver immediate and aggressive rate cuts.
What Happened: Economist Mohamed El-Erian noted that yet again, “it is the post-FOMC press conference that moves the markets,” rather than the outcome of the meeting itself.
El-Erian, who is currently the Chief Economic Adviser at Allianz, highlighted the fact that “stocks fall, bond yields rise, and the dollar strengthens,” as a result of the Fed’s remarks, while adding that Fed Chair Jerome Powell “sounds more hawkish than many expected on the outlook for policy rates.”
See Also: Bitcoin, Ethereum, XRP, Dogecoin Decline After Federal Reserve Holds Rates
Here, El-Erian is referring to the Fed’s readiness to keep rates elevated if needed, not giving any hints of possible rate cuts in the next meeting.
Former Boston Fed President Eric Rosengren warned that this meeting was unlikely to offer clear forward guidance. He pointed out that the labor market remains tight, saying “unemployment still at full employment,” and inflation continues to hover above the Fed’s 2% target.
In his view, policymakers are likely to maintain a cautious, “data dependent” approach rather than committing to a definitive path.
Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home’s equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started
Goldman Sachs’ Ashish Shah, notes the ‘historic’ dissent vote, referring to the fact that the Central Bank’s decision was not unanimous, but was reached by a 9-2 vote.
“It’s the first time we’ve seen two board members dissent since 1993,” he says, adding that “As expected Governors Bowman and Waller were dovish outliers, with the majority of the FOMC instead preferring to wait to learn more about the inflation process over the summer,” as quoted by Bloomberg finance correspondent, Sonali Basak.
Why It Matters: Powell had told Congress over a month ago that the Fed’s near-term policy uncertainty revolves entirely around Trump’s tariffs. “Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell said during the hearing.
Despite his verbal jabs at the Fed Chair, Trump said last week that he does not intend to fire Powell, saying that, “To do so is a big move and I just don’t think it’s necessary.”
He did, however, continue to press for lower interest rates, saying that “I’d love him to lower interest rates,” during a visit to the Fed’s headquarters last week.
Photo Courtesy: Poetra.RH on Shutterstock.com
Read More:
Fed Skips Rate Cut Again — But Reveals Something We Haven’t Seen Since 1993 Market News and Data brought to you by Benzinga APIs
