The Federal Reserve has kept interest rates unchanged after its first meeting of the year, despite signaling a more cautious approach to rate cuts last month. The decision was in line with market expectations, which saw 99.5% of traders pricing in no rate cut.
Traders were initially spooked by the Fed’s signal for caution during December’s meeting, but this latest move did not change investor sentiment. The US economy remains strong on paper, but inflation concerns continue to linger. Inflation rose 2.9% in December, and the new administration has added uncertainty to the market.
President Donald Trump has also been applying pressure on the Fed and its chair, Jerome Powell, which could impact the central bank’s decisions. However, Powell signaled that the Fed will be more cautious going forward, stating that the policy stance is now “significantly less restrictive.”
The Fed’s decision does not mean its work is done, as borrowing costs remain higher than usual. The median expectation for interest rate cuts in 2025 has decreased from four to two, and economists are losing confidence about how much the Fed will ease monetary policy.
Source: https://fortune.com/2025/01/29/fed-meeting-interest-rates-jerome-powell-donald-trump-inflation-stocks