Federal Reserve’s speech Jerome Powell began with the Fed who deliberately stops to cut the rates, which went against the request of President Donald Trump to cut them. Trump is about to apply 100% of the fault for the market accident on Powell and then bring out the long knives. Prepare.
“The economy is strong; The inflation approached our 2% goal but remains in some way high, “Powell said at the FOMC press conference in Washington.” Overall, a wide range of indicators suggests that the conditions in the labor market are widely unbalanced “.”
With the economy in possession of the company, the stabilization of the labor market and the inflation that refuse to take back, the Fed will keep the rates still, at least for now.
Bitcoin dropped by 1.2% on the news and the capitalization of the market of total cryptocurrencies decreased by 2.6%.
Federal Reserve Jerome Powell speech
Today, the Federal Open Market Committee (FOMC) has announced that it is holding the line on the rate of federal funds, keeping it stable between 4.25% and 4.5%. The decision temporarily interrupts the cuts of the rates that started last year and the loan costs were shaved.
“With the economy that remains strong, we do not need to be in a hurry to adapt our political position,” said Powell.
Powell also underlined caution and a perspective of data in his post-MEETING observations.
Inflation remains a concern for the FOMC meeting
The first direct question to Jerome Powell concerned the influence that President Donald Trump had on cuts to interest rates after requiring the cutting rates of the Fed.
Powell replied: “I have no comments on what the president said. I have not had contacts [with the president]. “
Trump asked Fed to continue cutting interest rates …
But there is a 98% probability that the Fed ignores its requests today. pic.twitter.com/twxbobmw1p
– Polymarket (@Polymarket) January 29, 2025
The rhythm of breakage of the Fed’s Fed last year tamed inflation a little, but remains sticky, stubbornly perched above the target. The cutting of the rates too soon risks rekindling the pressure themselves that the Fed worked to suppress.
“Inflation is not yet dead,” Erasmus Kersting said, an economist in Villanova, in an interview. “For now, keeping cuts from the table seems prudent.”
The potential moves of the administration of President Donald Trump complicate this calculation. Rates, spending reviews and repressions for immigration threaten to interrupt monetary planning.
A “Wait-and-See” approach after the Federal Reserve Jerome Powell speech
The latest position of the Fed highlights a return to its mantra dependent on data. With the slowdown of inflation at the end of 2024 and the cooling of the labor market from the post-apandemic tops, the officials seem to be content to maintain stable rates until clear economic indicators emerge.
The continuous quantitative tightening in the background, further pressing the yields of long -term ties. At the same time, the Fed’s budget has significantly reduced, facilitating its imprint in credit markets.
Most economists require that the Fed will keep the rates still during its March meeting, with potential delayed cuts until May. For now, patience is the name of the game. Powell must balance the risks of inflation, the strength of the labor market and the possibility of external shocks from new federal policies.
The plot of the “Policy of interest of the Federal Reserve 2025” reflects an intent of the Central Bank on the navigation of economic turbulence, while safeguarding the stability of prices and employment. With attention on data with respect to speculation, the measured approach of the Fed ensures that it remains ready to adapt as the economic conditions evolve.
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