The US central bank, the Fed, is maintaining the interest rate at between 4.25 and 4.50 percent, as expected. This is stated on the central bank's website on Wednesday evening Danish time. The decision comes at a time of mixed signals from the US, both economically and politically.
- Uncertainty about the economic outlook has increased further, says a statement from the central bank's governing body.
Job growth was solid in April, as was growth in consumption for the first quarter. At the same time, there is uncertainty about the political course. In particular, the increased tariffs as a result of US President Donald Trump's tariff war have created fears of inflation and recession. This is the assessment of a number of economists, including Allan Sørensen, chief economist at the Confederation of Danish Industry.
- Since Donald Trump was inaugurated as president, the US central bank has not found room for an interest rate cut, he says in a written comment.
- The massive tariff increases will push up inflation, and therefore the Fed will not ease interest rates until the uncertainty has subsided.
The central bank is tasked with determining a monetary policy so that the economy is balanced and employment is as high as possible, while prices develop stably.
But with Trump's tariff policy, it finds itself like "a wedge between two nails". This is the assessment of chief economist at Sydbank Søren Kristensen. He points out that the higher tariffs are pulling in the direction of both higher inflation and an economic slowdown.
- The central bank does not yet know which of the two effects will be the greatest, and therefore Fed Chairman Powell and his colleagues are wisely sitting on their hands and waiting to see what happens to interest rates in the United States, Kristensen assesses.
With Wednesday's announcement, the bank is ignoring numerous critical statements from US President Donald Trump, directed at US Federal Reserve Chairman Jerome Powell.
- He should lower them, Trump said this weekend, referring to Powell and interest rates.
Here Trump also rejected speculation that he had intended to fire Powell.
/ritzau/
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