The Federal Reserve, the central bank of the United States of America, has confirmed that it is increasing the interest rates for a fourth time this year amidst the sustained opposition from President Donald Trump.
As anticipated prior to the announcement, the Fed said that it would raise the interest rates by 0.25 to a range of 2.25 percent 2.5 percent – the highest level in a span of a decade.
However., it added that there would be fewer rate increases next year, with the economy of the US has been growing strongly and the improvement in the job market.
It said in a statement that “some” more rate increases would be required, decreasing the expected number of increases next year from three to two.
It said that economic risks were “roughly balanced,” however, it added that it would “continue to monitor global economic and financial developments and assess their implications for the economic outlook.”
It added that there were no dissents in the policy decision.
Yesterday, Trump continued his dispute with the central bank. He criticised the then-expected decision to increase rates on Twitter.
Trump tweeted: “It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike.”
In a press conference that was held today as a response to the questions regarding the criticism of Trump, Powell stated: “Political considerations play no role in our decisions about monetary policy. We are absolutely committed to that mission and nothing will deter us from doing what we think is the right thing to do.”
He added: “I am not worried [about Trump] because I know we are always going to do our jobs as we have always done them.”
However, he added that the Fed would continue in making its decisions based on the best “objective” data that is available, repeatedly calling the year a “strong year.”
Trump has long been opposed to increasing the interest rates on the basis that they might affect economic growth and has in the past called the Fed “loco” and “crazy” for doing so.
Much of his past criticism has been aimed at Jerome Powell, the Fed chairman – who Trump appointed – for being too “aggressive” in increasing the rates.
The Fed has increased rates throughout the year in an effort to reduce the positive effect of fiscal policy on the economy, which policymakers believe is rising faster than is sustainable.
There are fears that the swiftly growing economy could face struggles in 2019 as the financial boost from the spending of the government and the $1.5 trillion package of tax cuts ceases to have a strong effect and the global economy slows down.