As expected, the central bank Federal Reserve (Fed) is leaving the interest rate unchanged. This follows the rate, divided into three occasions, being lowered by a total of one percentage unit since September.
Now the message from Fed Chairman Jerome Powell, who, as usual, held a press conference after the announcement, is cautious.
Inflation is a bit too high and the economy is strong, says US expert Elisabet Kopelman.
No Signals
For the Fed, inflation pressure and the labor market situation are crucial.
In the Fed's December forecast, the central bank estimated that there will only be two interest rate cuts of 0.25 percentage points each in 2025.
There are no signals that they are preparing to take new steps. Now, data must first come in. They want to maintain a slightly restrictive policy to ensure that inflation really comes down, says Kopelman.
In the background is the newly elected President Donald Trump and a promised policy of high tariffs, slowed immigration, and a overhaul of the entire government apparatus.
"A Complication"
The new policy may entail inflation risks. But Kopelman notes that it is not something that the Fed and Powell want to comment on. The Fed also wants to "keep an arm's length" from Trump's statements about more and faster interest rate cuts.
Powell wants to wait and see what policy comes and how it will affect the economy. Right now, it's nothing you can act on, says Kopelman and adds:
It is obvious that this is an additional complication for the Fed.
Kopelman does not believe in any further interest rate cuts before at least May.
To get an interest rate cut in March, we need to see clearer weaknesses in the labor market.
