United States Interest Rate

A majority of Fed policymakers acknowledged that the high level of uncertainty warranted a cautious approach when considering further adjustments to monetary policy, minutes from the January 2025 FOMC meeting showed. Many participants suggested that the Committee could maintain the policy rate at a restrictive level if the economy remained robust and inflation stayed elevated. Conversely, several noted that policy could be eased if labor market conditions weakened, economic activity slowed, or inflation returned to 2% more quickly than expected. Many policymakers stressed the need for additional evidence of sustained disinflation. Participants also highlighted upside risks to inflation, citing potential shifts in trade and immigration policies, geopolitical disruptions to supply chains, and stronger-than-anticipated household spending. The Fed kept the fed funds rate steady at the 4.25%-4.5% range in January, pausing its rate-cutting cycle after three consecutive reductions in 2024.