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Updated 11:53 IST, January 30th 2025

In Its First Meeting Under Donald Trump 2.0, US Fed Leaves Rates Unchanged - Key Decisions

The Federal Reserve was chaired by Jerome Powell, who said, "We don't know what will happen with tariffs, with immigration, with fiscal policy and with regulato

Reported by: Business Desk
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US Fed Leaves Rate Unchanged
US Fed Leaves Rate Unchanged | Image: Reuters

The US Fed has left rates unchanged, it said in an announcement on Wednesday, January 30, 2025.

Why Is There No Change?

The Federal Reserve was chaired by Jerome Powell, who said, "We don't know what will happen with tariffs, with immigration, with fiscal policy and with regulatory policy."

The Fed wants the policies to play themselves out before they can take any concrete steps towards increasing or decreasing the rate.
"We are going to watch carefully, as we always do." Powell said.

The decision is in tandem with the uncertainty that usually comes at the beginning of every new presidential term.

Target Rate Change

The FOMC said in a release, "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run."

The press release further added, " the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent."

A line chart titled "US federal funds target rate" that tracks the metric over time. The interest rate was left unchanged in January.

Source: Reuters

Open To Rate Change

"The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals." the FOMC said in the statement.

The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Hawkish

The Fed's rate decision on Wednesday was widely anticipated following its rate cuts in 2024, which reduced the benchmark rate by a full percentage point, Reuters reported.

"The Fed seems to think the economy is stuck with a low unemployment rate and elevated inflation," said Brian Jacobsen, chief economist at Annex Wealth Management. "The statement could be read to be mildly hawkish, suggesting that a little jolt to rates could kick the economy out of this equilibrium.", Reuters reported.

Lindsay Rosner, head of multi-sector fixed-income investing at Goldman Sachs Asset Management, said, "while we continue to think the Fed's easing cycle has not yet run its course, the FOMC will want to see further progress in the inflation data to deliver the next rate cut, highlighted by the fact they removed the reference on inflation making progress.", Reuters reported.

 

Published 08:50 IST, January 30th 2025