- The Fed held rates at 4.25%-4.5%, signaling a cautious stance amid economic uncertainties.
- Fed officials emphasized patience on rate cuts, citing policy and economic uncertainties.
Following its first policy meeting of the year, the Federal Reserve (Fed) announced that it would keep the policy rate unchanged at 4.25%-4.5%, in line with market expectations. In its policy statement, the Fed acknowledged stagnant inflation data in recent months and removed previous language indicating that inflation had "made progress" toward the 2% target. Instead, the central bank emphasized that price increases "remain elevated."
During the post-meeting press conference, Fed Chairman Jerome Powell reiterated that the central bank is in no rush to adjust monetary policy, citing elevated uncertainty due to potential economic policy shifts under the Trump administration.
The Fed Sentiment Index climbed above 120, up from 107 before the meeting, reflecting a more hawkish stance from the Fed following the January decision.
Fed Officials Reinforce Cautious Approach
Comments from Fed policymakers further confirmed the hawkish rhetoric, with the Fed Sentiment Index remaining steady at 120.
- Fed Vice Chairman Philip Jefferson highlighted uncertainty around government policies, stating that a strong economy allows for a cautious approach to policy easing.
- San Francisco Fed President Mary Daly echoed this sentiment, noting that the Fed can afford to take its time to assess data and policy shifts before making rate decisions.
- Chicago Fed President Austan Goolsbee emphasized that fiscal policy changes affecting prices and employment require careful evaluation, suggesting that the Fed should slow the pace of rate cuts amid ongoing uncertainties.
The Fed's cautious stance reinforces expectations that monetary easing may take longer than anticipated, with policymakers prioritizing economic stability over premature rate adjustments.
