Fed declines to lower interest rate, ending 3-cut run

FILE - Federal Reserve Board Chairman Jerome Powell speaks during a press conference following a meeting of the Federal Open Market Committee at the Federal Reserve on December 18, 2024 in Washington, DC. (Photo by Alex Wong/Getty Images)

The Federal Reserve has declined to lower its benchmark interest rate. Here’s what to know as its latest meeting concluded Wednesday: 

Interest rate unchanged

The backstory:

The Fed made three consecutive rate cuts in 2024 - reducing the rate by a full percentage point - but inflation is persisting above target. 

As such, The Federal Reserve left the key rate unchanged after its January meeting.

President Donald Trump recently called for the Fed to lower interest rates, and the latest decision to pause rate cuts could prompt Trump to renew his criticism of the central bank and Fed Chair Jerome Powell, whom Trump nominated to the role in 2017.

Last week in Switzerland, Trump said he would bring down energy prices, then "demand" that the Fed lower borrowing costs.

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By the numbers:

The Fed is holding the interest rate at 4.25% to 4.5%.

Inflation, which soared to a four-decade high in 2022, is back down to 2.4%, according to the Fed’s preferred measure. Its target is 2%.

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What's next:

With inflation lingering, Fed watchers expect policymakers will take a slower approach to rate cuts in 2025. 

The probability of the Fed holding rates steady for its next meeting in March was 68% as of Tuesday afternoon, according to the CME FedWatch tool.

The next opportunity for a rate cut after that meeting is in May.

The Source: Information in this article was taken from the conclusion of the Fed’s two-day January policy meeting. Background information was taken from The Associated Press and FOX Business. 

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