The US Federal Reserve is in no “hurry” to adjust interest rates again, central bank Chairman Jerome Powell said on Wednesday, after policymakers voted to pause rate cuts in the first decision since Donald Trump’s White House return.
The Fed’s rate-setting committee voted unanimously to keep the bank’s benchmark lending rate at between 4.25 percent and 4.5 percent, the Fed announced in a statement.
“With our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell told reporters after the decision.
Photo: Bloomberg
In the statement, the Fed said the unemployment rate had stabilized “at a low level,” and the labor market was still solid.
However, inflation “remains somewhat elevated,” the Fed said, removing a reference in earlier statements to inflation making progress toward its long-term target of 2 percent.
Most analysts agree that the US economy is going fairly well, with robust growth, a largely healthy labor market, and relatively low inflation which nevertheless remains stuck above the Fed’s target.
Futures traders see a probability of more than 80 percent that the Fed is to extend its pause to rate cuts at its March meeting, according to data from CME Group.
However, in a post to his Truth Social account, US President Trump slammed both Powell and the Fed, accusing them of failing “to stop the problem they created with Inflation.”
Since he returned to office on Jan. 20 this year, Trump has revived his threats to impose sweeping tariffs on US trading partners as soon as this weekend and to deport millions of undocumented workers.
He has also said he wants to extend expiring tax cuts and slash red tape on energy production.
Most — though not all — economists expect Trump’s tariff and immigration policies to be at least mildly inflationary, raising the cost of goods faced by consumers.
Asked about the likely impact of Trump’s proposals, including tariffs, Powell said the Fed would have to “wait and see” how they affected the economy.
At the previous Federal Open Market Committee (FOMC) meeting, policymakers dialed back the number of rate cuts they expect this year to a median of just two, with some incorporating assumptions about Trump’s likely economic policies into their forecasts, according to minutes of the meeting.
Given the uncertainty about the effect of Trump’s policies on the US economy, analysts are now divided over how many rate cuts they expect the Fed to make this year.
“We retain our baseline that the FOMC will cut rates 25bp [basis points] this year, in June,” Barclays PLC economists wrote in a note, pointing to the economy’s underlying strength.
Moody’s Analytics chief economist Mark Zandi said he also expects two rate cuts later in the year.
However, “there are meaningful odds that the next move by the Fed may not be a rate cut, it might be a rate increase,” he added.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such