The decision followed the central bank’s first scheduled Federal Open Market Committee meeting of the year, which ran for two days. The Fed had cut rates three straight times — in September, October and December — by 0.25 percentage point each, but paused that easing streak.
The move was widely seen as a bid to slow the pace of policy changes as concerns persist that President Donald Trump’s sweeping tariff plans could reignite inflation.
In its statement, the Fed said recent indicators suggest economic activity has been expanding at a solid pace. It added that job gains remain low, the unemployment rate shows signs of stabilizing, and inflation “remains somewhat elevated.”
Reiterating its goals of maximum employment and 2% inflation, the Fed said uncertainty about the economic outlook remains high and it is watching risks to both sides of its mandate.
At a news conference after the decision, Chair Jerome Powell said newly released data and sentiment reflected in the Fed’s Beige Book suggest growth is starting the year on a solid footing. He said the U.S. growth outlook has “clearly improved” since the FOMC meeting in December.
On the timing and pace of further rate cuts, Powell reaffirmed the stance he laid out when the Fed cut rates in December, saying the Fed is in a good position to respond to risks between its dual goals.
Powell said there was broad support within the committee — including among nonvoting members — to hold rates. He added, “No one sees the next rate adjustment as a rate hike” as a baseline outlook, underscoring that the Fed is not considering an increase at this point.
The decision was not unanimous. Of the 12 voting members, 10, including Powell, supported holding rates, while two — Gov. Stephen Miran and Gov. Christopher Waller — dissented in favor of a 0.25-point cut.
Miran previously served as White House National Economic Council chair during the Trump administration, and Waller has been mentioned as one of four candidates Trump is considering for the next Fed chair. Their dissent was seen as aligned with Trump’s push for rate cuts.
Gov. Michelle Bowman, also cited as a potential Fed chair candidate, voted to hold rates.
The decision kept the interest-rate gap between South Korea and the United States at 1.25 percentage points based on the upper end of the U.S. range. South Korea’s benchmark rate is 2.50%. The Bank of Korea on Jan. 15 held its rate at 2.50% for a fifth straight meeting.
Asked about the economic impact of tariff policy, Powell said the U.S. economy has held up “quite well” given major changes in trade policy. He cited that tariff levels were softened from initial announcements, there were no foreign retaliatory steps, and much of the tariff increases have not yet been passed on to consumer prices.
On the recent surge in gold prices above $5,000 an ounce, Powell said the Fed monitors markets but does not react to specific asset-price moves. “There may be claims that we’ve lost credibility, but that’s not true,” he said.
He added that expected inflation shows the Fed’s credibility is “exactly where it should be,” rejecting claims that worries about damage to the Fed’s independence drove the rise in gold.
Asked why he issued an unusual statement related to a grand jury subpoena involving him, Powell said, “Please refer to the statement released on the 11th. I won’t add to it or repeat it.” He also said he had nothing to say on whether he complied with the subpoena.
Powell also declined to say whether he would continue serving out the remainder of his term as a Fed governor after his chair term ends in May, saying he had nothing to discuss on that matter.
Trump, speaking the day before in Iowa during an economic address, said he would announce Powell’s successor “soon” and said that under a new chair, “you’ll see rates come down a lot.”
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.