Live: Federal Reserve Remains Cautious Amid Uncertainty

Economists React to FOMC Decision and Powell Comments

18 hr 4 min ago

After the committee’s interest rate decision and Chair Jerome Powell’s subsequent comments, economists were seemingly unsurprised that interest rates remained unchanged.

Here’s what some of them had to say:

Wells Fargo Chief Economist Jay Bryson: “There was little in today’s statement to suggest the FOMC is contemplating another rate cut in the near future. With the pace of real economic activity holding up and with inflation remaining above target, we think the FOMC will keep rates on hold until the second half of 2025.”

BMO Capital Markets Deputy Chief Economist Michael Gregory: “The room to be concerned about stubborn inflation and thus more cautious about policy rate cuts is afforded by a sturdy labor market and the broader economy.”

Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni: “With no news in the statement, every word from upcoming speeches will be closely parsed to determine whether this is just a pause before another cut or two or whether this level of the federal funds rate will be the low point for this cycle.”

Moody’s Analytics Economist Matt Colyar: “Tariffs and deportations will add to inflation but will also diminish growth and, on net, come out a wash for monetary policy. The persistent strength of the U.S. economy is giving the Fed cover to sit on its hands until it is clear which policies are implemented and their relative effect on inflation and growth.”

The FOMC is Struggling With More Uncertainty Than Usual, Powell Said

19 hr 14 min ago

Federal Reserve officials are constantly updating forecasts and making predictions based on where the economy is going.

Forecasting has become a little bit more difficult at the moment, as uncertainties around policy are making the future even more difficult to predict than usual, Fed Chair Jerome Powell said.

“We know that economic forecasting is really difficult beyond just a month or two out. So in the current situation, there’s probably some elevated uncertainty because of significant policy shifts in…tariffs, immigration, fiscal policy and regulatory policy,” Powell said. “But that should be passing. We should go through that, and then we’ll be back to the regular amount of uncertainty.”

Fed Chair Powell Says He Has Not Communicated With President Donald Trump

19 hr 18 min ago

This is the first FOMC meeting under Donald Trump’s second administration.

However, Trump and Powell have been on a collision course since the presidential election. Trump threatened the independence of the Fed on the campaign trail, and Powell has maintained that it is vital that the central bank remain free from presidential control.

Just last week, Trump told a gathering of world economic leaders that he would “demand that interest rates drop immediately.”

When asked if Trump has made any demands of the FOMC, Powell said he has not had any contact with the president.

Jerome Powell Says Fed Is ‘Not In a Hurry’ to Make Cuts

19 hr 23 min ago

Fed Chair Jerome Powell said members of the Open Markets Committee are mindful not to reduce interest rates too fast or too much because they do not want to hinder progress on inflation.

He said the committee will continue to watch data to determine future interest rate cuts.

“With our policy stance significantly less restrictive than it had been in the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said.

Fed Chair Jerome Powell Will Speak to Reporters

19 hr 33 min ago

Federal Reserve Chair Jerome Powell will speak to reporters following the announcement. You can watch the press conference here.

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FOMC Changes Focus on Unemployment and Inflation

19 hr 40 min ago

The FOMC statement on Wednesday was similar to the one from its most recent meeting in December. However, it removed references to the rising unemployment rate and inflation having made progress toward the Fed’s goal.

The members of the FOMC painstakingly craft these statements to signal to the market their thoughts on where the economy is at and what may come next for the policy making body.

Why Did the Federal Reserve Leave Its Interest Rate Unchanged in January?

19 hr 55 min ago

The Fed has a dual mandate to promote price stability and maintain maximum employment.

High post-pandemic inflation led the Fed to keep interest rates at a two-decade high before cutting last fall when concerns started to grow about rising unemployment.

Since then, December inflation remained stubborn, but Fed officials said they were confident it was still on the way to their target of 2% annually. Employers surprisingly added 256,000 jobs in December, beating economists’ expectations of 155,000.

Because there is little threat of widespread job loss and progress has stalled in the fight against inflation, Fed officials said they were holding their influential interest rate citing economic uncertainty.

“The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” the central bank committee said in a statement.

Federal Reserve Holds Its Interest Rate For First Time in Four Meetings

20 hours ago

The Federal Open Market Committee held the fed funds rate at a range of 4.25% to 4.5% at its meeting Wednesday, ending a three-meeting streak of rate cuts going back to September.

The fed funds rate, which influences borrowing costs on all kinds of loans, is now a full percentage point below the 20-year high, where it had been held for more than a year to combat inflation. However, Fed officials still consider it to be “restrictive,” or discouraging of borrowing and spending, and a drag on the economy.

To read more about the decision, click here.

-Diccon Hyatt

Don’t Expect An Interest Rate Cut

20 hr 8 min ago

The Fed, which cut its benchmark rate at each of its last three meetings dating back to September, isn’t expected to trim the fed funds rate at this meeting. After the last meeting, the Fed warned that the pace of easing would likely slow due to persistent inflation pressures.

According to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data, traders think there’s a 99.5% chance that the Fed will leave its influential interest rate at its current range of 4.25%-4.50%

To read more about what to expect from this meeting, click here.