US Fed defies Trump and holds interest rates

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US Fed defies Trump and holds interest rates

But for now, the Fed chief said, low inflation allows the central bank to be "patient" in deciding on any further changes to its overnight benchmark lending rate, which it left in a range of 2.25 percent to 2.50 percent on Wednesday.

The most recent data showed a measure of underlying inflation running at 1.6 percent, which would be a problem if it meant households and businesses had doubts about the economy's strength and were less willing to spend and invest.

The Federal Reserve made a decision to keep United States interest rates steady at 2.25 to 2.5 per cent, on Wednesday (local time), and signalled that a rate cut - or hike - would not be happening any time soon.

The day featured a number of public remarks by US central bankers, several of whom were taking part in a Hoover Institution monetary policy conference in Stanford, California. Investors continue to bet on a rate cut, but odds of that happening lessened slightly following Powell's press conference.

He conceded, however, that the "proper relation" between the Fed and the White House is one in which the central bank remains independent.

"As long as economic growth continues and the labour market remains healthy, this appears unlikely", Marple said.

"If the inflation were to run persistently below 2 percent or persistently above 2 percent that would be a concern for the committee and the committee would take that into account in making policy", he explained.

Staunch Trump loyalist Senator Lindsey Graham of SC told reporters Moore's nomination would be "very problematic". "It really has no implications for policy", said Powell.

The next FOMC announcement will be June 19.

"We suspect that some transitory factors may be at work", Powell said.

He said China is boosting its economy by keeping rates low, but "Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low".

"We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing", Trump wrote on Twitter.

The decision follows months of unprecedented public criticism of the Fed from Trump who has called its decisions "crazy" and discussed firing the Fed chairman, Jerome Powell.

Evans, answering questions after a speech in Stockholm, said he would "not be afraid to act" if a rate cut was warranted by the inflation outlook, though he also said it would take some time for him to come to that view. The yield then scored a fresh low of 2.46% on the initial FOMC headlines but bounced to 2.51% on Powell's upbeat assessment of the U.S economy - The chance of a Fed rate cut by December, implied by Fed fund futures, decreased from 100% to 70%.

Powell said that economic risks around the world have eased, with the improvement in recent data from China and Europe.

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