The Federal Reserve is set to stand pat at its first gathering of 2025, pressing pause on interest rate cuts as policymakers take stock of how the world’s largest economy is faring. After lowering interest rates by a full percentage point last year, central bank officials are at a turning point.
A strong labor market has afforded the Fed room to move more slowly on reducing rates as it seeks to finish off its fight against high inflation. Officials see the economy as being in a “good place” and their policy settings as appropriate for an environment with receding recession risks but nagging concerns about inflation.
Stoking fears are a spate of economic policies in the pipeline from President Trump, which include sweeping tariffs, mass deportations, widespread deregulatory efforts and lower taxes. The economic impact of those policies is unclear, but policymakers and economists appear most wary about the possibility of fresh price pressures at a time when progress on taming inflation has been bumpy.
The Fed will release its January policy statement at 2 p.m. in Washington, and Jerome H. Powell, the Fed chair, will hold a news conference right after.
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