British News Agency

The Fed stated that it would maintain the federal funds rate in the current range of 4.25% to 4.5%. This decision follows three rate cuts by the central bank since September 2024, reducing the federal funds rate—the rate at which banks lend to each other for short-term loans—by one percentage point.

This pause, which marks the Fed’s first interest rate decision since President Trump took office on January 20, has led economists to expect a "wait-and-see" approach regarding the president’s economic policies, especially considering the potential inflationary effects of high tariffs.

The Fed’s decision to keep interest rates steady reflects persistent U.S. inflation, which is hovering around 3% annually. This has fueled concerns that further rate cuts could reignite price increases and make it harder for the Fed to achieve its 2% inflation target. Notably, the Fed removed a line from its December statement indicating that inflation was "making progress toward its goal." However, Fed Chair Jerome Powell adopted a more dovish tone in his press conference.

"Long-term inflation expectations, as reflected in surveys of households, businesses, and forecasters, as well as financial market indicators, appear to be well-anchored," Powell stated.

Powell also pointed to GDP growth, strong job gains, and low unemployment, along with signs of easing inflationary pressures, describing the economy as "in a pretty good place." He added, "There is no need to rush in adjusting our policy stance."

Lindsay Rosner, head of multi-sector fixed income investments at Goldman Sachs Asset Management, stated, "We have hit the pause button. The FOMC will want to see further progress in inflation data before considering another rate cut, as highlighted by the removal of the inflation progress reference from the Fed’s statement."