New Federal Reserve Rates and Their Market Impact – Check Details Here

The US Federal Reserve made its first significant decision during President Donald Trump's second term on Wednesday, announcing in a "unanimous" vote that it would maintain the interest rate reduction.

This action is anticipated to cause some friction between the central bank and the recently elected president. Donald Trump has already put forward arguments regarding having some influence over Fed policy.

No Change in Federal Reserve Interest Rates

The Fed noted that inflation is still "somewhat elevated, and the economic outlook is uncertain" and stated that the interest rate would stay in the 4.25–4.50% band.

The announcement is made against the backdrop of China's DeepSeek flooding US markets, causing losses for a number of major American companies, including Nvidia. 

Federal Reserve: Economy is Growing at "Solid Pace"

According to a Reuters story, the US central bank retracted its December statement's claim that inflation "had made progress" toward the 2 percent target.

The Federal Reserve stated that the labor market conditions are still "solid" and that the unemployment rate has stabilized at a low level.

Achieving inflation and employment targets is "roughly in balance," according to the Jerome Powell-led agency. It pointed out that the United States economy has been growing steadily.

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Unanimous Decision to Hold Interest Rates

According to the Fed, there was "unanimous" support for the policy of maintaining stable interest rates. This indicates that all 12 Federal Reserve officials who cast votes at the meeting this month agreed to maintain the current level of interest rates.

Furthermore, recent inflation data have continued to be at least half a percentage point above the Fed's target. The Fed has placed rates on hold while it waits for data to support its stated belief that the progress made in reducing inflation will continue this year.

US Market Reaction to this Decision

"The Committee will carefully assess incoming data, the evolving outlook, and the balance of risks when determining the extent and timing of additional adjustments to the target range for the federal funds rate," the Federal Open Market Committee, which sets policy for the central bank, stated in a statement.

Short-term interest rate futures following the Fed's announcement indicated that investors anticipate the central bank to postpone rate cuts until June, with US bond yields remaining relatively stable and stocks experiencing slight declines.