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The Federal Reserve paused its interest rate cutting campaign Wednesday and gave no signal it plans to lower rates again in the near term amid uncertainty spawned by inflation and President Donald Trump’s economic policies.
The decision to hold rates steady at a range of 4,25 percent to 4,5 percent could mark the beginning of an extended respite as the Fed assesses the course of inflation and awaits details on Trump’s trade and immigration plans.
Alternatively, it could be a brief hiatus if inflation swiftly resumes a pullback and officials believe the President’s policies will modestly nudge up consumer prices.
“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the (Fed) will carefully assess incoming data, the evolving outlook, and the balance of risks,” the Fed said in a statement following a two-day meeting.
That mirrors the guidance Fed officials provided in December and signals “some patience” as they weigh further reductions in the key rate while navigating myriad economic and policy crosscurrents, according to Barclays.
Inflation broadly has eased since a pandemic-related surge but stayed elevated in recent months. The economy and job market have been remarkably resilient, though hiring has slowed substantially. And it’s unclear to what extent Trump will slap certain imports with tariffs and deport millions of immigrants who lack permanent legal status, and what the effects will be on the economy and inflation.
In its statement, the Fed removed its assertion in December that inflation “has made progress” toward the Fed’s 2 percent goal, simply noting that “inflation remains somewhat elevated.” — USA Today.
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