Washington:
The US Federal Reserve has decided to keep the interest rates stable in its Federal Open Market Committee (FOMC meeting). Fed maintained rates in range of 4.25% to 4.5%, indicating that rates are unlikely to be cut in the near future.
Fed Chair Jerome Powell said that there is no hurry for policy change at the moment and the situation will be monitored to further inflation.
Fed’s policy stand: rates stable, what will happen next?
Fed Chair Powell clarified that the rates are not yet right for Fed Rate Cut and Fed is not in any haste. However, if the inflation rate decreases rapidly and the government’s policies do not have much effect, then the fed can cut rates in future.
He said, “We are not in a hurry to change our monetary policy. The economy is currently strong and the pressure of interest rates is not as much as it was before.”
Impact of inflation and American policies
Fed said in his statement that inflation still remains “some high” and needs to be brought to a target of 2%. However, this time Fed in his statement removed the mention of improvement in inflation, which increased the confusion among investors. Powell described this change as just language reform and said that there is no deep message.
Impact on global market after the announcement of Fed
The impact of this decision of Fed was also seen on the global stock market and currency market.
- Wall Street: The US stock market declined as investors hoped that the fed would soon cut rates, but it did not happen.
- Asian Markets: Japan’s markets declined, while Australian shares were slightly raised. The markets of China, South Korea and Taiwan remained closed due to Lunar New Year holidays.
- Dollar and Yen: Japanese Yen saw a slight increase in Japanese Yen, while the American bond market did not stir much.
Now what next?
The Fed’s decision indicates that there will be no change in interest rates by the first half of 2025. If inflation continuously decreases and the economy remains stable, then after June 2025, the fed rate cuts may consider.
At the moment, investors should be prepared for market fluctuations as the next meeting of Fed and the new economic policies of America will be further clear.