At 3 a.m. Peking time on Thursday, the Federal Reserve announced its first interest rate decision for 2025.
In line with market expectations, the federal funds rate Range remains at 4.25%-4.50%, pausing the previous trend of cutting rates in three consecutive meetings.
Compared with last December's decision, the wording of the decision has changed very little.
The Federal Reserve stated at the beginning of the decision that recent Indicators indicate that economic activity continues to expand at a steady pace. The unemployment rate has remained low recently, the labor market conditions are still solid, and inflation remains at a relatively high level.
In the decision at the end of last year, the Federal Reserve's wording was 'the unemployment rate has risen but is still low,' and inflation 'is progressing towards the committee's 2% target but is still slightly high.'
Another difference is that there was one dissenting vote in the December decision last year, while the latest decision was passed unanimously.
With the arrival of the new year, the voting members of the Federal Reserve FOMC have changed. This includes Cleveland Fed President Harker, who voted against in December, as well as Bostic, Barkin, and Daly, who no longer have voting rights, replaced by Susan Collins (Boston Fed), Austan Goolsbee (Chicago Fed), Jeffrey Schmid (Kansas Fed), and Alberto Musalem (St. Louis Fed).
Full text of the Federal Reserve FOMC January decision:
Recent economic indicators suggest that economic activity continues to expand at a robust pace. The unemployment rate has remained low recently, and the labor market remains firm. Inflation is still at a relatively high level.
The committee is committed to achieving maximum employment and a long-term inflation target of 2%. The committee believes that the risks to achieving the employment and inflation targets are roughly balanced. The economic outlook remains uncertain, and the committee is aware of the dual risks faced by its dual mandate.
To support this goal, the committee decided to maintain the target Range for the federal funds rate at 4.25% to 4.5%. When considering further adjustments to the federal funds rate target Range, the committee will carefully evaluate the latest data, the evolving economic outlook, and the balance of risks. The committee will continue to reduce its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. The committee is firmly committed to supporting maximum employment and restoring the inflation rate to the 2% target.
In assessing the appropriate stance of monetary policy, the committee will continue to monitor the impact of upcoming information on the economic outlook. If risks that may impede the achievement of the committee's goals emerge, the committee is prepared to adjust the monetary policy stance as necessary. The committee's assessment will consider a broad range of information, including labor market conditions, inflation pressures and expectations, and changes in financial and international conditions.
The members participating in the voting for monetary policy actions include: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Adriana D. Kugler, Alberto G. Musalem, Jeffrey R. Schmid, and Christopher J. Waller.
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