RalphHightower · RalphHightower · Jan 29, 2025 · Jan 29, 2025
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+---
+layout: post
+tags: [Federal Reserve System (FRS), economy, employment, inflation, Jerome Powell, ]
+categories: [Donald Trump]
+date: 2025-01-29 5:46 PM
+excerpt: ''
+#image: 'BASEURL/assets/blog/img/.png'
+#description:
+#permalink:
+title: "Federal Reserve Holds Interest Rate Steady Despite Trump's Attempt To Wreck Havoc On Inflation And Unemployment"
+---
+
+
+January 29, 2025
+
+## Federal Reserve issues FOMC statement
+
+For release at 2:00 p.m. EST
+
+Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.
+
+The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
+
+In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
+
+In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
+
+Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; 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.
+
+For media inquiries, please email [email protected] or call 202-452-2955.
+
+Implementation Note issued January 29, 2025
+
+## FOMC Press Conference, January 29, 2025
+<iframe width="560" height="315" src="https://www.youtube.com/embed/REimusg6un4?si=Xh6xZ_E5iEH1Kae8" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
+
+Jan 29, 2025  DISTRICT OF COLUMBIA
+Transcript (PDF): https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250129.pdf
+
+Press conference materials: https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
+
+The Federal Reserve System is the central bank of the United States. It performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest. 
+
+The Federal Reserve conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy; promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad; promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole; fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations.
+
+Visit the Federal Reserve’s website at https://www.federalreserve.gov for more information.
+
+## [January 2025 Federal Reserve interest rate decision: No cut after first meeting since Trump's return](https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-decision-january-2025-what-to-know-rcna189628)
+
+*Policymakers left their benchmark rate unchanged amid signs that the economy is humming along, defying the president’s tradition-bucking pressure on the central bank.*
+
+Jan. 29, 2025, 5:00 AM EST / Updated Jan. 29, 2025, 4:34 PM EST
+By J.J. McCorvey and Steve Kopack
+
+Federal Reserve officials held interest rates steady following their first policy meeting to take place during the second Trump administration. That decision drew President Donald Trump’s ire after he’d sought to [pressure on policymakers](https://www.cnbc.com/2025/01/23/president-donald-trump-says-hell-demand-that-interest-rates-drop-immediately.html) to drive rates lower.
+
+One clue to the central bank’s rationale: Its press release announcing the decision — which analysts typically parse for signs of the path ahead — struck a more cautious tone on inflation. Officials removed part of a line in their previous release saying inflation “has made progress toward” a goal of 2%, noting in Wednesday’s statement only that it “remains somewhat elevated.”
+
+Federal Reserve Chair Jerome Powell said in a press conference following the announcement that recent inflation data looked “good,” but “we’re not going to over-interpret two good or two bad [inflation] readings.”
+
+Consumer prices averaged [2.9% higher in December](https://www.nbcnews.com/business/economy/inflation-report-december-2024-economic-outlook-2025-rcna187502) than the same period a year earlier — an annual rate that has hovered for months above the Fed’s 2% target.
+
+@RalphHightower: The current inflation rate is 2.9%.+×
+
+Trump slammed the central bank hours after its rate decision.
+
+“Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing,” he wrote on his Truth Social platform. “If the Fed had spent less time on DEI, gender ideology, ‘green’ energy, and fake climate change, Inflation would never have been a problem.”
+
+@RalphHightower: Trump, your only experience with interest rates is as a highly leveraged borrower. You plunged your family-run business into bankruptcy six times! If you controlled the central bank, we'd probably be in a depression. During one of your many bankruptcies, one of your debtor banks put you on a monthly allowance.
+
+The fresh criticism extends Trump’s long-running habit of publicizing his views on monetary policy — something U.S. presidents have long avoided to maintain the Fed’s autonomy from politics.
+
+In a videoconference address to the World Economic Forum in Davos, Switzerland, last week, Trump said he’d “demand that interest rates drop immediately.”
+
+“I know interest rates much better than they do,” he [said in follow-up comments](https://www.cnbc.com/video/2025/01/23/pres-trump-on-the-fed-i-know-more-about-interest-rates-than-they-do.html) after his Davos address. He also renewed his criticism of Powell, whom he appointed in 2017 and [has promised not to try to remove](https://www.nbcnews.com/politics/donald-trump/donald-trump-says-wont-fire-fed-chief-jerome-powell-rcna183276) to try to remove before Powell’s term ends in May 2026.
+
+The Fed chief told reporters Wednesday that he wouldn’t comment “whatsoever on what the president said” about interest rates. “The public should be confident that we will continue to do our work as we always have.”
+
+Powell also said he hasn’t had any direct contact with Trump. “Lots of research shows [independence is] the best way for a central bank to operate,” he added.
+
+The U.S. economy has changed dramatically since Trump left office in January 2021, with the country still gripped by the Covid-19 pandemic and bitter disputes over lockdown measures to combat it.
+
+After a pandemic-era run-up in prices that devastated many consumers’ finances, inflation has been curtailed dramatically. Unemployment edged down to 4.1% in December from 4.2% the month before after employers added over a quarter-million jobs, helping tamp down worries about [a labor market that has remained sturdy even as it cools](https://www.nbcnews.com/business/economy/us-jobs-report-december-2024-what-it-means-job-market-economy-rcna187059).
+
+Consumer spending, meanwhile, [has held steady](https://www.nbcnews.com/business/personal-finance/credit-card-bills-are-coming-due-record-holiday-shopping-season-rcna189465) despite households’ increasing focus on value. Gross domestic product — driven largely by the consumption of goods and services — has grown by at least 3% for two straight quarters, federal researchers said in December.
+
+Analysts see these and other metrics as signs that the economy is still humming along despite the inflation fight’s difficult “last mile,” which would reduce the need for a fresh boost from the Fed just yet. The central bank has penciled in two rate cuts this year after lowering them for three consecutive meetings, whittling its benchmark rate from a 20-year high range of 5.25%-5.5% to the current 4.25%-4.5%.
+
+“We think disinflation continues on a slow and sometimes bumpy path,” Powell said Wednesday. “We don’t need to be in a hurry to adjust our policy stance.”
+
+Bankrate Chief Financial Analyst Greg McBride put the situation more bluntly: “The progress toward 2% inflation has stalled out, and the Fed knows it,” he said in a statement Wednesday. “They gave no indication in their post-meeting statement that a resumption of rate cuts is likely at the next meeting in March. It will take a run of good inflation data to get us there, whenever that may be.”
+
+Economists say the delicate dance of keeping borrowing costs elevated enough to wrestle price growth lower without pushing the economy into a recession has become more complicated. [That’s largely due](https://www.cnbc.com/video/2025/01/28/cnbc-fed-survey-59-percent-say-trumps-expected-policies-will-be-somewhat-inflationary.html) to Trump’s economic agenda — [particularly tariffs](https://www.nbcnews.com/business/economy/tariffs-economists-dont-rcna176164), with his first policy move on that front [expected Saturday](https://www.cnbc.com/2025/01/27/trump-tariffs-could-raise-prices-on-laptops-smartphones-and-ai-.html).
+
+Asked about the potential economic impact of tariffs, Powell said “the range of possibilities is very wide.”
+
+“We don’t know for how long or how much, what countries. We don’t know about retaliation. We don’t know how it’s going to transmit through the economy to consumers,” he said.
+
+Whatever the eventual outcome, “it’s clear that the central bank’s decisions this year will be shaped by the Trump administration’s policies on trade and immigration,” Joe Brusuelas, chief economist at the financial firm RSM, [wrote in a note](https://realeconomy.rsmus.com/morning-market-minute-rate-path-more-uncertain-as-era-of-fiscal-dominance-begins/) Tuesday ahead of the interest rate announcement. “These policies could lead to higher inflation, or, just as important, raise inflation expectations, which would put the Fed’s long-held 2% inflation target at risk.”