Fed announces interest rate decision

The US Federal Reserve (Fed) kept interest rates steady at its first meeting of 2025, in line with market expectations.

In a statement released by the US Federal Reserve (Fed), it was noted that the decision to keep interest rates unchanged was taken unanimously.

The statement reported that it was decided to maintain the target range for the federal funds rate at 4.25-4.50 percent to support the bank's objectives.

The statement noted that recent indicators suggest economic activity continues to expand at a solid pace, adding that the unemployment rate has stabilized at a low level in recent months and labor market conditions remain strong.

The statement noted that inflation remains somewhat elevated.

It was noted that the phrase "has made progress toward the 2 percent inflation objective," which appeared in previous statements, was removed from the Fed's monetary policy decision text.

PAUSE IN RATE CUTS

In March 2020, the Fed lowered the policy interest rate to the 0-0.25 percent range and initiated quantitative easing due to concerns regarding the economic impact of the novel coronavirus (COVID-19) pandemic.

Facing rising inflation in the country, the Fed completed its asset purchase program in 2022 and began interest rate hikes, implementing 11 rate increases since March 2022 and raising the interest rate by a total of 525 basis points. With these increases, the bank's policy rate had reached the 5.25-5.50 percent range, the highest level since 2001.

The Fed, which last raised the policy rate by 25 basis points in July 2023, had kept the interest rate unchanged in the current range for 8 consecutive meetings.

The Fed, which cut interest rates for the first time in 4 years last September, lowered the policy rate by 50 basis points. The Fed also cut the policy rate by 25 basis points each in November and December of last year.

With this latest decision, the Bank has paused the interest rate cuts it had implemented in 3 consecutive meetings last year.

In the US, inflation, which reached its highest level since 1981 at 9 percent annually in June 2022, was most recently recorded at 2.9 percent annually in December 2024.