FED HOLDS RATES STEADY AMID SLOWING GROWTH EXPECTATIONS
Monetary policy remains unchanged as the Federal Reserve voted 11 to 1 to keep the federal funds rate steady at 4.25% – 4.50%. However, Christopher Waller supported maintaining the current pace of securities asset reduction.
🔍 Key Highlights:
✅ No rate cuts… for now. After three consecutive cuts last year, the Fed paused reductions in January and is maintaining its stance.
✅ Inflation progress: Down from 9% in June 2022 to 2.8% in February 2025—but still above the 2% target.
✅ Slower growth ahead:
📉 GDP projections revised downward for the next three years:
🔹 2025: 2.1% → 1.7%
🔹 2026: 2.0% → 1.8%
🔹 2027: 1.9% → 1.8%
💡 What’s next? As uncertainty looms, businesses and investors must navigate shifting economic currents with strategic foresight and resilience.
The statement from the Fed stated that the monetary policy decision was made by 11 votes to 1.
It was reported that Christopher Waller supported keeping the policy rate constant but preferred to continue the current rate of reduction in securities assets.
The statement reported that in order to support the bank’s targets, it was decided to keep the target range of the federal funds rate constant between 4.25-4.50 percent.
THE FED HAD PAUSED THE REDUCES IN JANUARY
With the progress made in inflation, the Fed had reduced interest rates for the first time in 4 years in September last year and lowered the policy rate by 50 basis points.
The Fed, which also lowered its policy rate by 25 basis points in November and December of last year, paused the interest rate cuts it had made in three consecutive meetings last year in January.
Inflation in the US was recorded as 2.8 percent annually in February after reaching 9 percent annually in June 2022, the highest level since 1981.
GROWTH EXPECTATIONS DECREASED
US Central Bank (Fed) officials have revised downward their growth expectations for this year and the next two years.
According to the “Economic Projection Report” announced by the Fed, GDP expectations were lowered from 2.1 percent to 1.7 percent for 2025, from 2.0 percent to 1.8 percent for 2025, and from 1.9 percent to 1.8 percent for 2027.
Fed officials left their long-term expectation unchanged at 1.8 percent.
📊 How do you think the Fed’s decision will impact markets and business strategy?
