The US federal reserves left their reference interest rate unchanged on Wednesday after reducing it three times in a row last year, which is a sign of a cautious approach while the Fed seeks to evaluate where inflation is moving and what policies President Donald Trump can continue.
The central bank reduced the rate last year from 5.3 to 4.3 percent, partly from the concern that the labor market is weak.
The hiring slowed down in the summer and the unemployment rate marked, which led the Fed officials to approve a huge half -point decrease in September. However, employment of the recovered last month, and the unemployment rate slightly decreased, to low 4.1 percent.
In his statement on Wednesday, Fed upgraded his job market assessment, calling it “solid”, and noted that the unemployment rate “stabilized at a low level of recent months.”
The Fed seems to have also tightened his evaluation of inflation by saying that “it remains a bit elevated.”
Both a healthier labor market and stubborn inflation would usually mean less decreasing Fed rates in the coming months. Fed Jerome Powell’s chairman said it was harder to evaluate where inflation moves, partly because of the increased uncertainty about which Trump policies would adopt and how quickly it would affect the economy.
Canada lowers prices
A few hours earlier, the Canadian Central Bank reduced the interest rate by 25 base points to three percent, as Governor Tiff Macklem warned that he could do little to do to denial the economic impact of any US tariff imposed by Canadian imports.
Trump promised wide tariffs, reduction of taxes and a massive deportation of migrants, and all this could encourage prices more. He said he would impose a 25 -long tariff on all Canadian imports, which he could come as early as February 1st.
The FED usually maintains high interest rates for slow borrowing and consumption and cold inflation. Powell said in December that the central bank had entered the “new phase”, in which he expects to be intentionally moving. In December, Fed officials suggested that they could only reduce the rate twice as many this year.
Goldman Sachs economists believe these cuts will not happen until June and December. In November, inflation was only 2.4 percent, to the prefers Fed, not far from the goal of 2.0 percent. But excluding unstable categories of food and energy, fundamental prices increased 2.8 percent compared to the year earlier.
