US Fed Policy Meet: Central Bank Rate Cut Paused, Singals High-Inflation Risk

The US Federal Reserve in its policy meet upheld the decision of unaltered interest rates, despite pressure from Donald Trump to lower borrowing cost.

This decision marks a move against Trump's push for cut in rates, as the central bank decides to make policy independent of the white house and continues to be patient. However, a cut would have resulted in hitting bolstering the economy after Trump's liberation day tariffs that induced uncertainties across global markets.

The move keeps the Federal Reserve's influential lending rate hovering around 4.3 per cent, marking the third announcement in a row without action.

The US Federal Reserve said "swings in net exports" did not appear to have affected the solid economic activity -- an acknowledgement to the pre-tariff surge in imports in the first quarter ahead of the introduction of Trump's "liberation day" tariffs.

Unemployment rate plunges, inflation rate head towards 2% target 

The US President Donald Trump had introduced steep levies last month on China, and lower "baseline" levies of 10 percent on goods from most other countries, sparking weeks of turbulence in the financial markets.

The White House also slapped higher tariffs on dozens of other trading partners, and then abruptly paused them until July to give the United States time to renegotiate existing trade arrangements.

As per data published in recent weeks point to an economic contraction in the first quarter of the year, while the unemployment rate has hovered close to historic lows, and the inflation rate has trended towards the Fed's long-term target of two percent.

Reportedly, Fed Chair Jerome Powell will want to make "very little news" during his regular press conference later Wednesday, Nationwide Chief Economist Kathy Bostjancic told AFP ahead of the rate decision.

Powell will likely face additional questions about the Trump administration's support for his leadership of the independent central bank, given public criticism leveled at him and the Fed by senior government officials -- including the president.