Federal Reserve Chairman Jerome Powell said U.S. inflation is possibly being dragged down by “transitory” forces and there is no bias to either tighten or ease monetary policy.
Powell, who’s been slammed by President Donald Trump for not doing more to support the economy, told reporters after the Fed left its main rate unchanged that the policy stance is “appropriate right now” and “we don’t see a strong case for moving in either direction.”
The committee repeated language from its previous meeting, saying it “will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate,’’ according to a statement Wednesday following a two-day gathering in Washington.
The unanimous 10-0 decision left the target range for the benchmark federal funds rate at 2.25 percent to 2.5 percent.
The Fed’s emphasis on subdued inflation prompted knee-jerk buying of government debt as traders added to positioning for a rate cut. However, that initial rally reversed on Powell’s comments on appropriate policy and transient inflation.
The two-year yield is higher on the day at 2.29 percent, and the 10-year yield has popped back above 2.50 percent. The U.S. dollar has also reversed and is now stronger on the day.
Officials also adjusted one of the tools they use to keep the fed funds rate within its target range, though Powell said the “change does not reflect any shift in the intended stance of monetary policy.”
In addition to weighing economic developments, Fed officials have endured a steady drumbeat of criticism from Trump over past rate hikes. Powell and his colleagues have said repeatedly they’ll ignore the pressure and chart policy according to what best suits the longer-run prospects of the world’s largest economy.
As with recent economic data, the Federal Open Market Committee’s assessment of conditions had something for both hawks and doves.
Officials slightly upgraded their assessment of the economy, saying “economic activity rose at a solid rate” while “the labor market remains strong.”