The Federal Reserve announced on Wednesday that it will keep its interest rates intact. The decision comes after the Fed made three consecutive rate cuts towards the end of 2024 and brought its benchmark rate in the range of 4.25% to 4.5%.
The Federal Open Market Committee (FOMC) unanimously voted to pause further rate cuts at the conclusion of its two-day meeting in Washington, D.C. The move was somewhat expected, as policymakers previously indicated the intention to take a patient approach to interest rate changes in 2025.
In a statement released following the meeting, FOMC said that the economic activity in the country continued to expand “solid pace,” while adding that the unemployment rate remains at a low level and that the labor market conditions are “solid.” It also described the inflation as “somewhat elevated.”
“The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run,” FOMC noted. “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”
Additionally, Fed chair Jerome Powell said that the U.S. central bank will have to see “real progress on inflation or some weakness in the labor market” before considering further rate adjustments.
The Fed’s decision to keep the interest rates unchanged caused a brief slide in the stock market that was diminished in the following hours. Benchmark S&P 500 was down by 0.72% at one point before closing down by 24.57 points or 0.41%.