US Federal Reserve Keeps Interest Rate Steady At 4.25%-4.5% After Three Consecutive Rate Cuts
The Jerome Powell-led committee keeps the benchmark interest rate unchanged.
The US Federal Reserve on Wednesday maintained its benchmark interest rate after slashing it three times in a row. The decision was based on consensus. This marks the committee's first policy meeting since Donald Trump assumed office as US president on Jan. 20.
In December, the Federal Open Market Committee reduced the federal funds rate target by 25 basis points, bringing it to a range of 4.25% to 4.50%.
The FOMC statement said US economic activity has continued to grow at a steady pace. "The unemployment rate has stabilised at a low level in recent months, and labour market conditions remain solid," said the statement, adding that inflation remains somewhat elevated.
The Jerome Powell-led committee sees risks to achieving its employment and inflation goals "roughly in balance," even as the economic outlook is uncertain. It also maintains that officials will evaluate incoming data, the economic outlook, and risk balance when considering future rate adjustments.
In November, the FOMC also lowered the rate by 25 basis points to a range of 4.50% to 4.75%, marking its second rate cut in over four years. Prior to that, in September, the Fed had reduced the rate by 50 basis points, bringing it to a range of 4.75% to 5%.
The central bank had maintained its key interest rate unchanged for eight consecutive meetings until July, when it increased the rate by 25 basis points, reaching a 22-year high.
The US central bank will meet again on March 18-19.
Economy Growing At Solid Pace, Labour Markets In Balance
In a press conference, Federal Reserve Chair Jerome Powell stated that the US economy continues to grow at a solid pace, despite facing ongoing challenges.
He highlighted signs of stabilisation in the housing sector and noted that while inflation has moved closer to the Fed's 2% target, it still remains somewhat elevated. "A wide range of indicators suggest the labour market is in balance," Powell added.
Addressing comments from President Donald Trump, who had remarked on Jan. 23 that he believed he knew interest rates "much better than they do," Powell declined to comment, stating only that he had had no contact with the President. Powell also emphasised that there is "no need to rush in adjusting the policy stance at this time."
Get live updates on the US Fed meeting here.
