Federal Reserve keeps its interest rates unchanged.
On January 29, 2025, the Federal Open Market Committee (FOMC) voted to leave the federal funds rate at a target range of 4.25% to 4.50%. The move represents a halt in the cuts implemented throughout 2024, as the Fed continues to take a cautious stance in monetary policy to address ongoing economic conditions. The Fed wants to balance maximum employment with controlling inflation, which is currently characterized as "somewhat elevated."
The growth of the economy and problems with inflation
Regarding this meeting, Fed Chair Jerome Powell highlighted that, though economic activity continues to grow solidly, infection pressures remain a concern. The FOMC stated that any future rate cuts will be slow and based on clear signs of economic weakness and declining inflation. Thus, market expectations have changed, expecting restricted interest rate cuts in 2025 as the situation unfolds.
Implementation Strategies and Market Reaction
The FOMC specified strategic operations to keep the federal funds rate within the target range effective January 30, 2025. This includes overnight repurchase agreements and managing Treasury securities payments. After the announcement, market reactions were mixed, with major stock indices, including the S&P 500, slightly down, while Treasury yields rose in response to the Fed's cautious stance. This reflects investor sensitivity to the Fed's decisions as they assess economic indicators moving forward.


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