The repo rate is currently in the range of 4.25–4.5 percent.
Fed notes in its decision that the uncertainty about the economic development, including inflation, is still high. The bank also notes that unemployment is low and that the conditions on the labor market are generally stable.
Expected message
Filip Andersson, chief analyst at Danske Bank, says that Fed's message was expected. That two members went against the board and wanted to see a reduction is, however, not common.
At the press conference after the message, Fed chief Jerome Powell did not want to say whether it tends to a rate cut at Fed's meeting in September.
He pushed back a bit against the expectations that there will be a reduction in September. But he also opened up for the possibility that until the September meeting, more data will be received so that the picture can of course change.
Powell also pointed out that it is too early to say what effects the American tariffs will have on the outside world.
He said that the process is probably slower than what one believed at the beginning of the year. That's what we think seems to be his main concern, that it should start to show more clearly in inflation, says Filip Andersson.
Trump demands reduction
It is the fifth time during Donald Trump's second presidential period that the central bank makes a decision not to change the interest rate. Previously, Fed lowered the repo rate three times in a row.
Already in the afternoon, before the interest rate decision, Trump went out on social media and demanded an interest rate reduction, among other things, with reference to the fact that inflation is low and that the US GDP grew by 3 percent during the second quarter of the year.
