FOMC Holds Interest Rates Steady Amid Inflation Concerns

2025-01-30

The Federal Open Market Committee (FOMC) held its first meeting of 2025 on January 29, deciding to keep interest rates steady at a range of 4.25%-4.5%. This decision follows a cumulative percentage point of rate cuts over the last three meetings of 2024. The FOMC’s policy statement acknowledged a lack of progress toward its 2% inflation target, noting that inflation remains “somewhat elevated” despite recent economic expansion and a stable labor market.

Fed Chair Jerome Powell emphasized that the removal of language referencing “progress” on inflation in the statement should not be interpreted as a signal of future policy shifts. He reiterated that inflation has made progress toward the 2% objective but remains above target. The decision to hold rates steady was unanimous, marking a shift from December’s meeting, which saw one dissenting vote.

Powell also addressed broader economic concerns, stating that the economic outlook remains uncertain but not unusually so. He pushed back on claims of overstaffing at the Fed and clarified that he has had no recent contact with former President Donald Trump. The FOMC’s statement provided little indication of future rate adjustments, leaving the committee flexibility to respond to incoming data and economic developments ahead of its next meeting in March.

The Fed’s cautious approach reflects ongoing challenges in balancing inflation control with economic growth, as policymakers continue to monitor labor market conditions and price stability.

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