pushed Warsh’s predecessor<\/a>, Jerome Powell, to cut interest rates, and made clear he expected Warsh to fulfil his demand for cuts.<\/p>\nBut, with inflation running at an above-target 3.8%, and uncertainty surrounding Trump’s deal to end the war with Iran, the Fed’s rate-setting committee unanimously decided to kept rates steady.<\/p>\n
In a statement backed by its 12 members, the Federal Open Market Committee (FOMC) said: “Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. <\/p>\n
“Job gains have kept pace with the workforce, and the unemployment rate has changed little.”<\/p>\n
The Fed’s statement on Wednesday represented a marked change in the central bank’s communication style, one of Warsh’s key promises for his tenure.<\/p>\n
He was a sharp critic of how the Fed has communicated its decisions in the past, arguing it should say less while getting on with the job.<\/p>\n
Its last statement, released in April, was almost 350 words, while Wednesday’s update was just 132. “The Committee will deliver price stability,” it concluded.<\/p>\n
The Fed’s update also removed a statement hinting that it was leaning towards lowering interest rates in the future. <\/p>\n
And nine of the 18 central bankers who participated in the FOMC’s rate-setting process predicted an interest rate hike this year, while just one said they expected a cut. The remaining eight predicted rates will stay the same, according to the closely watched “dot-plot” grid of central bankers’ expectations released alongside the decision. <\/p>\n
Warsh did not offer a projection of his own for the “dot-plot”, which he opposes, but said he encouraged his colleagues to go ahead with it.<\/p>\n
Samuel Tombs, chief US economist at Pantheon Macroeconomics, said the “big news” from Wednesday was the “dot-plot” pointing to potential interest rate hikes before the end of the year.<\/p>\n
Commenting on the Fed’s decision, Trump said: “It’s alright\u2026 whatever.”<\/p>\n
When asked about potential interest rate hikes, he replied: “It could happen\u2026 it’s hard to believe,” adding “it just keeps the country down, it is so unusual”.<\/p>\n
But he heaped praise on Warsh, whom he nominated to replace Powell. “We have a very good guy over there now, so I’m guided by what he wanted,” he said.<\/p>\n<\/div>\n
\n
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