Last Updated:
US Fed Chairman Jerome Powell is scheduled to address the media at 1:00 AM IST. The focus will now be on Powell’s commentary regarding future monetary policy, particularly the possibility of rate cuts later this year.
US Fed Meeting Updates.
US Fed Meeting LIVE Updates: The US Federal Reserve on Wednesday kept its key interest rates unchanged at 4.25-4.50 per cent in the first monetary policy review of the year 2025. It is in line with the market expectations. US Fed Chairman Jerome Powell is scheduled to address the media at 1:00 AM IST. The focus will now be on Powell’s commentary regarding future monetary policy, particularly the possibility of rate cuts later this year.
Ahead of the policy decision, the US markets were trading lower with the Dow Jones down by 0.17 per cent and the Nasdaq trading lower by 0.78 per cent (12:13 am IST). The US Dollar Index was trading marginally higher by 0.05 per cent at 107.92, while the US 10-year bond yield was slightly up at 4.557 per cent.
After the decision, the US markets extended losses with the Dow trading lower by 0.43 per cent and the Nasdaq down by 1.04 per cent (12:41 am IST). However, the US bond yield rose to 4.573 per cent. The US dollar index remained almost flat at 107.96.
“The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate,” the FOMC said in a statement.
It added, “In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 per cent.”
The FOMC also said the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities.
The US Fed on December 18 announced a cut in the key interest rates by 25 basis points to 4.25-4.50 per cent. It was the third rate cut by FOMC in three months, with the first rate cut announced in September (by 50 basis points) and second in November (by 25 bps). The first cut in the current rate cut cycle came in September after a gap of four years.
In December 2024, the US Fed projections had shown two quarter-point interest-rate cuts in 2025.
The central bank implemented aggressive rate hikes in 2022 and 2023 to combat soaring inflation, which peaked at 9.1% in mid-2022. However, inflation has gradually cooled, coming closer to the Fed’s 2% target.
Today’s decision and Powell’s remarks will set the tone for the Fed’s stance in the coming months. A dovish outlook could bolster equity markets, while a more cautious tone may affect it adversely. The global economy, especially emerging markets, will also react to any signals regarding future US monetary policy.