The Federal Reserve has voted to keep interest rates the same – despite pressure from Donald Trump to make a cut. The US central bank said on Wednesday that it will keep its key lending rate between 3.5% to 3.75%, claiming that economic activity has been «expanding at a solid pace».
It comes after the Fed cut rates three times last year amid growing pressure from the White House to lower borrowing costs and make it easier for people to get mortgages and other loans. In a statement, the Fed said that «job gains have remained low, and the unemployment rate has shown some signs of stabilization». Inflation remained «somewhat elevated», and the Fed added that it «is strongly committed to supporting maximum employment and returning inflation to its 2% objective».
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Mr Trump is soon expected to announce a replacement for Fed chair Jerome Powell, who the president has frequently criticized for not reducing interest rates quickly enough. Mr Powell, whose term ends in May, has been locked in a feud with Mr Trump over the pace of rate cuts since his second term as president began. Christopher Waller, one of two Fed officials to vote in favor of an interest rate cut, is thought to be under consideration by the White House to replace Mr Powell.
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The other official, Stephen Miran, is on leave from his post on Mr Trump’s Council of Economic Advisers. Mr Powell said earlier this month that the Fed had received subpoenas from the Justice Department as part of a criminal investigation into his congressional testimony about a $2.5bn building renovation.
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Last year, the White House moved to remove Lisa Cook, a member of the Fed’s board, from her role, claiming she had committed mortgage fraud – a claim she has strongly denied and that has resulted in no criminal charges. Economists say Mr Trump’s efforts to pressure the Fed may have backfired, as Republicans in the Senate voiced support for Mr Powell – and threatened to block Mr Trump’s replacement chair. «The last couple of weeks have been pretty positive for Fed independence,» said Patricia Zobel, head of macroeconomic research at Guggenheim Investments.
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