This decision coincided with market expectations—no changes. The balance sheet continues to shrink: minus $5 billion per month.
📋 Key points of the Fed's accompanying letter:
– Economic activity continues to grow steadily.
– The unemployment rate remains consistently low.
– Inflation still exceeds the target level.
– Uncertainty regarding economic prospects has increased.
– The risks of simultaneously higher inflation and unemployment have increased.
– The Fed is ready to change policy if necessary.
Jerome Powell's speech:
Overall assessments:
– The US economy remains resilient.
– Inflation has decreased but remains above 2%.
– The labor market is balanced, wage growth is moderate.
– The slowdown in GDP in the first quarter is related to trade policy.
– Consumer sentiment has deteriorated.
– Short-term inflation expectations have risen.
– The impact of tariffs is not yet fully understood, but it complicates the situation.
On monetary policy (MP):
– The current rate remains at a 'good level'.
– The Fed will wait and respond to macro data.
– A rate cut may be postponed until 2026.
– Appeals from politicians, including Trump, do not influence the Fed's decisions.
– The Fed does not rule out the possibility of a rate cut this year, but such a scenario is still in question.
– An increase in tariffs could lead to higher inflation and unemployment.
– The Fed acknowledges the contradiction between the two goals of its mandate: stable prices and employment.
– US debt is on an unsustainable trajectory.
– There are currently no grounds for an immediate rate cut.
❗️ Conclusion: The Fed is taking a wait-and-see position, acknowledging the increase in economic uncertainty and the impact of tariffs on the macroeconomy.
