The Federal Reserve opted to maintain interest rates on Wednesday, signaling a cautious approach amid economic uncertainty. Fed Chair Jerome Powell emphasized that further rate adjustments would depend on economic data, particularly inflation and employment trends.

The central bank’s decision keeps the benchmark interest rate within the 4.25%-4.50% range. Powell stated that inflation remains above the Fed’s 2% target but noted that recent readings show some stability. The labor market, he added, has been steady, with unemployment rates holding at low levels. Given these conditions, Powell stressed there is no urgency to cut rates further.

President Donald Trump, who recently began his second term, has been vocal about his preference for lower interest rates. While he did not explicitly demand cuts following the Fed’s announcement, he attributed inflation concerns to the Fed’s focus on non-economic policies. Powell, however, avoided commenting on Trump’s statements, reiterating that the Fed’s decisions are based solely on economic conditions.

Financial markets had anticipated the Fed’s move, with short-term interest rate futures indicating that traders expect a rate cut around mid-year. The stock market saw minor losses following the announcement, while bond yields remained stable.

The Fed’s policy stance comes as Trump’s administration moves forward with proposals that could impact the economy, including potential tariffs, an immigration crackdown, and tax changes. Powell acknowledged that the central bank is closely monitoring these developments but will wait for concrete policy actions before assessing their economic effects.

Inflation has moderated from the peaks seen after the COVID-19 pandemic but remains slightly above the Fed’s comfort level. The latest consumer price index readings suggest inflation is holding steady rather than continuing to decline, prompting the central bank to take a wait-and-see approach before considering additional rate cuts.

Market analysts described the Fed’s position as slightly cautious. Some experts believe that while inflation is no longer climbing sharply, the Fed will require stronger evidence of sustained progress before easing monetary policy further. Others noted that the Fed’s statement removed previous language that suggested inflation was making clear progress, indicating a more measured approach moving forward.

Despite the Fed’s decision to hold rates, the broader economic landscape remains uncertain. Trump’s economic policies could introduce new variables that affect inflation, employment, and growth. Powell stated that the Fed will continue to respond to economic shifts as necessary but reiterated that the bank does not plan to preemptively adjust rates in response to potential policy changes.

For now, the Fed’s stance suggests a period of stability, with policymakers carefully evaluating data before making further moves. Investors and businesses will be watching closely in the coming months for signals on when the next rate adjustment may occur.

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