Sintra, Portugal (Reuters) – The president of the Federal Reserve (Fed), Jerome Powell, reaffirmed on Tuesday that the American central bank plans “to wait and learn more” on the impact of customs duties on inflation before lowering its interest rates, once again sweeping the calls of President Donald Trump to an immediate and significant drop in borrowing costs.
“We are simply taking time,” he said at the European Central Bank (ECB), which is held this week in Sintra, Portugal, in the aftermath of Donald Trump’s sending a handwritten missive indicating to what extent the other central banks had reduced their rates and suggesting that the United States should act.
“As long as the American economy is solid, we think it is prudent to wait to find out more and see what the effects could be,” said Jerome Powell.
Asked about the series of criticisms launched against him by Donald Trump, the president of the American central bank said that the Fed concentrated “100 %” on its objectives in terms of inflation and employment, aroused the applause of the public, including its colleagues from the ECB, the Bank of England (BOJ) and other central banks.
The independence of central banks in relation to the pressures of elected officials, at least when it comes to fixing interest rates, is considered essential to maintain inflation under control.
Jerome Powell also pointed out that most Fed officials are still expecting to lower the reference interest rate later in the year, and that this is not excluded during the four remaining meetings of the Central Bank.
The next Fed meeting will take place on July 29 and 30.
“It will depend on the data, and we are meeting by meeting,” said Jerome Powell.
The Fed awaits for Thursday the data on the employment of June, while new figures on inflation will be published in a few weeks. The date of July 9 is also closely followed since it constitutes the deadline for negotiations of the United States with its business partners before the establishment of customs duties.
(Report by Howard Schneider; Diana Mandia, edited by Blandine Hénault)
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