Washington: The US Federal Reserve’s two-day policy meeting started on Tuesday as Fed officials argued whether to increase or cut interest rates amid strong economic growth and weak inflation.
The Fed officials met here after the Department of Commerce reported last week that the US economy expanded at an annual rate of 3.2 per cent in the first quarter, mostly driven by strong exports and private inventory investment, Xinhua reported.
The better-than-expected growth in the first quarter has allayed worries of a sharp economic slowdown, giving some Fed officials reasons to believe that the central bank should stick to its rate-hiking plan. But some economists pointed out that the headline growth number overstated the US economy’s underlying strength, as personal consumption and business investment was actually weak in the first quarter. Moreover, the persistent soft inflation opened the door for policymakers to consider a rate cut.
US President Donald Trump has also repeatedly criticised the Fed’s rate increases and urged the central bank to lower interest rates to boost the economy. “Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening,” Trump tweeted on Tuesday. (IANS)