Federal Reserve Maintains Stability in Interest Rates After Three Cuts
- Interest rates maintained after series of cuts.
- Concern about inflation and the impact of new government policies.
- Reduced expectation of rate cuts for 2025.
The Federal Reserve decided to keep interest rates unchanged on Wednesday, after having cut them on three consecutive occasions through the end of 2024. During the two-day monetary policy meeting, the benchmark interest rate was kept at a range of 4,25% to 4,5%.
This pause in rate modifications comes at a time of caution on the part of those responsible for economic policy, who remain vigilant regarding the behavior of inflation and the possible impacts of future economic policies of the newly inaugurated Trump government.
In its final statement, the Fed removed previous references to inflation approaching its 2% target, saying only that “inflation remains elevated.” This signals a more conservative stance on future rate changes.
Fed officials revised the language they used to describe unemployment, saying it had “stabilized at a low level,” replacing an earlier description that had indicated it had declined. They also stressed that labor market conditions remained robust.
The new policy guidance suggests the central bank is now adopting tougher criteria for future interest rate cuts, after having cut borrowing costs by one percentage point last year.
Before that meeting, many Fed officials were already showing concern about persistent inflation, taking a cautious stance on further interest rate cuts for 2025, now forecasting just two cuts, in contrast to a previous forecast of four.
At the time of publication, the price of Bitcoin was quoted at US$103.423, up 3% in the last 24 hours.
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