The Federal Reserve held interest rates steady and several U.S. trade organizations have banded together against market economy status for China.
Fed Holds Rates Steady
The US Federal Reserve has decided to keep interest rates steady at between 0.25% and 0.5%, essentially cutting the interest rate increase path it created in December in half.
The central bank said the labor market was strengthening, but it was still looking for inflation to reach its 2% target and expected the US economy to continue to “expand at a moderate pace”
The US central bank last raised rates in December, saying it expected to raise rates four times in 2016. It now says it expects to raise rates just twice this year.
“Proceeding cautiously will allow us to verify that the labor market is continuing to strengthen given the economic risk from abroad,” said the Chairman of the Fed, Janet Yellen, speaking at a press conference after the announcement.
In a statement issued on Wednesday, the Fed’s Open Market Committee, which decides the level of interest rates, said that while the U.S. economy was seeing some improvement, weaker global markets were having a dampening effect.
The Fed’s decision Wednesday not to raise interest rates didn’t exactly surprise analysts, as the central bank announced it would remain on the policy sidelines until “realized and expected economic conditions” improve.
Trade Organizations Create Enforcement Lobby
A group of U.S. manufacturing associations today announced the formation of a new coalition, Manufacturers for Trade Enforcement, to oppose China’s designation as a market economy at the end of 2016.
China has claimed that it should be automatically accorded treatment as if it is a market economy after the 15th anniversary of its accession to the World Trade Organization in December 2016. U.S. law requires that the Department of Commerce make a market economy status determination based on established criteria, which many experts agree that China has not met.
“Our industries can compete against any other market-oriented competitors, but we cannot compete against the Chinese government,” said Heidi Brock, president and CEO of the Aluminum Association. “The Chinese economy does not meet the basic requirements set forth by U.S. statutes and the Department of Commerce for a functioning market economy, and we will work together in this coalition to speak loudly, and with one strong voice, to prevent China from gaining a status that it does not yet deserve.”
The groups united in their opposition to MES for China include: the Alliance for American Manufacturing, the aforementioned Aluminum Association, the American Fiber Manufacturers Association, the American Iron and Steel Institute, the Narrow Fabrics Institute, the National Council of Textile Organizations, the PET Resin Association, and the U.S. Industrial Fabrics Institute.