The federal reserves held their key interest rate on Wednesday, revealing a recent trend of relieving politics because it examines, which is likely to be a non -non -political political and economic landscape.
In a broadly expected move, the Central Bank’s Federal Market Committee has left an unchanged borrowing rate overnight in the range of 4.25%-4.5%.
The decision followed three direct decreasing since September 2024. In value of a full percentage of points and marked the first Fed meeting from frequent Fed critics Donald Trump He assumed the Presidency last week and almost immediately gave his intentions that he wanted the central bank to reduce rates.
After the meeting, a statement dropped several clues about the explanation behind the decision on the permanent states. He offered a slightly more optimistic view of the labor market, while giving up the key reference of December a statement that inflation “made progress to” FED’s goal of inflation of 2%.
“The unemployment rate has stabilized at a low level in recent months, and the conditions in the labor market are still solid,” has been a new language. “Inflation remains a bit elevated.”
A stronger labor market and stubborn inflation would provide less incentives to make it easier for politics. The statement again indicated that the economy “continued to spread to a solid pace.”
The recent statements of the policy creators have shown some concerns about whether the progress in the lowering of inflation has stopped. Officials also said that they wanted to see that previous cuts were going through economics, although most expect a rate of rates this year.
In addition, the decision comes against an unstable political background.
In just over a week, Trump broke through a series of Washington politics and political norms, as he signed hundreds of executive orders that seek to implement an aggressive plan. The president supported the tariffs as well as the economic and foreign policy tool, ordered a wave of deportations against those who illegally cross the border and presented a series of deregular measures.
Moreover, Trump spoke last week about his trust that he would break the inflation and said that he would “demand” that interest rates immediately drop “. Although the president has no authority over the Fed except that he appoints the members of the Committee, Trump’s statement has accumulated potentially disputed relationship with creators Politics, like his first term.
Inflation dropped abruptly from a 40-year-old top that hit in mid-2022, but Fed’s goal of 2% remained elusive. In fact, the preferred Central Bank price gauge showed that the inflation of the main line in November is higher to 2.4%, which has been the highest since July, while the basic measure has excluded food and energy held 2.8%.
Merchants appreciated almost 100% likelihood that the FED was holding a line at this meeting and really don’t see another incision that comes until June. The markets are prices in the funds rate of about 3.9% by the end of 2025, which implies 61% likelihood of two quarterly decreasing this year, according to the CME group.
Economic growth was solid, and consumer consumption was well maintained during 2024. The gross domestic product is monitored at an annual growth rate of 2.3% in the fourth quarter, according to Atlanta FED, which reduced an assessment from previous prospects by 3.2% by 3.2% as data on private domestic investments weakened.
The meeting also changed the composition of voting on FOMC.
The chairman of Jerome Powell and the other seven members of the Governor Committee joined this year as voters of regional president Austan Goolsbee of Chicago, Alberto Musalem of St. Louisa, Susan Collins from Boston and Jeffrey Schmid from Kansas. The vote for the unchanged rate of funds was unanimous.
