WASHINGTON, D.C. – Battling high inflation and an increase in energy prices due to the war with Iran helped drive the Federal Reserve to keep interest rates the same. Unchanging the same rate means that borrowing costs and loan prices will stay the same but if inflation remains high, the Fed could increase rates.
“The economy is showing impressive resilience, even with shocks the trends are positive and reveal solid growth,” said Federal Reserve Chairman Kevin Warsh. “Job gains as maintained with the workforce and unemployment has changed little.”
In Warsh’s second time presiding as the new chairman of the Central Bank, he announced the Fed will keep interest rates the same.
“Inflation remains elevated relative to the committee’s two percent goal,” said Warsh during a press briefing. “The committee remains resolute and you’ve heard this before, but we will deliver price stability.”
High inflation means the prices of everyday goods and services are rising fast, making the cost of living much higher. The Fed’s goal is to bring inflation down to two percent. Warsh noted the frustrations many feel that it has remained higher than that for more than five years.
The Fed is in a tough spot when it comes to interest rates. They are battling economic pressures from the wars in the Middle East and spikes in energy. In the Fed’s latest decision, there were three members who dissented and wanted to raise the rates by a quarter percent.
“I asked for a good family fight and I got one,” said Warsh on the dissenters.
The President pressured former Fed Chairman Jerome Powell to lower interest rates. This is how he responded to the Fed’s decision:
“Kevin’s got a board, he’s fantastic,” said President Trump. “He’s a smart and brilliant guy. I know he’d love to see lower interest rates, but he has a board.”
Rep. Jason Smith (R- MO), the Chairman of the House Ways and Means committee shared his frustration with the unchanged interest rate. In a statement he said in part: “One factor holding back further growth is persistently high interest rates. I hope the Fed will act soon to lower the cost of capital so businesses can grow even more.”
Warsh said the Fed will act on interest rates when appropriate.
“We’ll be continuing to watch the market, see how it responds to events and that can help our decision making when we meet in seven or eight weeks,” said Warsh.
Warsh took over the Fed from Powell, who was the center of an investigation by the Justice Department over the Central Bank’s two-billion dollar renovation project. The DOJ dropped the investigation against Powell. Powell remains on the board.
