(Bloomberg) — The Federal Reserve and three of the central banks that just backed its embattled chair are poised to keep interest rates unchanged at an edgy moment for global policymakers.
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Officials in Washington are widely expected to defy US President Donald Trump’s calls for lower borrowing costs on Wednesday at the end of their two-day meeting. Peers in Brazil, Canada, and Sweden may also retain current settings.
Those latter three were among more than a dozen, including the Bank of England and European Central Bank, whose chiefs spoke out in “full solidarity” with Chair Jerome Powell, backing independence at a time when the administration in Washington is dialing up the pressure on him and his colleagues.
Aside from Trump’s frequent complaints at its unwillingness to slash interest rates, the Fed now faces grand jury subpoenas threatening criminal indictments, while the Supreme Court heard arguments on Wednesday on whether the president can fire Governor Lisa Cook.
Beyond that melodrama, every central bank is acting against a tense global backdrop, evidenced by the recent market rout in Japan, lingering investor concern over Trump’s designs on Greenland, and his incessant threats of further trade disruption.
“We are in a more shock-prone world,” Kristalina Georgieva, head of the International Monetary Fund, said Friday at the closing session of the World Economic Forum in Davos. “We’re not in Kansas any more.”
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What Bloomberg Economics Says:
“We think most FOMC participants can cite data to support holding rates steady at the meeting. That degree of unity would be seen as a vote of support for Powell, who has come under fierce attack from the White House. The most interesting figures to watch are Governors Christopher Waller and Michelle Bowman: If they vote with the majority to hold steady, they’ll be signaling to Trump that they side with Powell — including on Fed independence. We expect Waller to vote with the majority, but Bowman to dissent.”
FAQs
1. What does an interest rate hold mean?
An interest rate hold means the central bank keeps rates unchanged to assess economic conditions before taking the next step.
2. Why is the Fed cautious right now?
The Fed is worried about persistent inflation while also monitoring signs of slowing economic growth.
3. How does the Fed impact global markets?
Fed decisions influence global liquidity, currency movements, and investment flows, especially in emerging markets.
4. Will this affect India’s stock market?
Yes, a stable Fed policy often supports Indian equities by easing foreign investor concerns.
5. Can the Fed cut rates later this year?
Possible, but only if inflation falls further and economic conditions weaken clearly.
Disclaimer
This article is intended for educational purposes only. The views and opinions expressed are those of individual analysts or brokerage firms and do not represent the views of GoldSilverReports.com. Investors are strongly advised to consult certified financial experts before making any investment or trading decisions.
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