The Federal Reserve left interest rates unchanged this month at 3.50–3.75 percent after its latest policy meeting. Officials said strong GDP and steady labor data supported the decision.
In December the Fed cut rates by 25 basis points. Chris Waller and Stephen Miran reportedly opposed holding rates and favored another 25 basis point cut.
Officials upgraded the economy’s assessment to “solid” from “moderate” after a strong third-quarter GDP reading and expectations for a strong fourth quarter. They called inflation “somewhat elevated” and said the jobs market showed “some signs of stabilization”, removing language that “downside risks to employment rose in recent months.”
Jerome Powell said economic activity is expanding at “a solid pace.” Housing activity remained weak and a recent government shutdown slowed labor market improvement (Ed. note: inflation has slowly lowered since 2022).
Donald Trump continued to call for lower rates, and tensions rose between the White House and the Fed. Powell revealed the administration had opened a criminal investigation into his testimony about the Fed’s headquarters renovation earlier this month.
The Dow Jones and the S&P 500 slipped a few points after the decision. The Fed gave no update on its previously stated plan for at least one additional rate cut in 2026.
