The Federal Reserve announced it will maintain interest rates at the same level set last month. This move was widely anticipated by financial markets but contrary to President Trump's wishes. The Federal Open Market Committee (FOMC) agreed to hold the target federal funds rate at 4.25% to 4.5%. The FOMC noted that unemployment has stabilized at a low level and inflation remains somewhat high.
Investors had widely anticipated the Fed's decision, with a extremely high probability of a pause priced in ahead of the announcement. Markets had little reaction, with the S&P 500 holding a small decline and benchmark 10-year U.S.A government bonds yield moving up slightly. Trump's statement on Truth Social stated: “Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing,”
President Trump has already started renegotiating Trade Deals such as the US-Canada-Mexico trade deal.
The Fed's decision reflects a cautious approach to monetary policy, maintaining rates well above the sub-3% seen from 2009 to 2021. With inflation above 2% for the last 45 months and economic growth remaining resilient, the Fed sees little urgency to cut rates more. The FOMC meeting in December had already decided a reduced forecast for rate cuts in 2025. This caused some concern in investors and businesses who are seeking lower rates to boost profits. As 2025 advances, the Fed's handling of tariffs and other policies will be observed.
Even then, our SBA Programs will be ready to assist your financial needs.
Comments