US Fed holds rates steady, warns of high inflation

Federal Reserve headquarters

The US Federal Reserve kept interest rates unchanged today, Jan. 29, following a two-day meeting, as widely expected.

This came after the Fed cut borrowing costs by 100 basis points (bps) over the last three meetings.

The Federal Open Market Committee (FOMC) agreed to maintain the interest rate range between 4.25% and 4.50%, with all 12 committee members voting unanimously in favor of holding rates steady.

Economic activity continued to expand at a strong pace, while labor market conditions remained robust. The unemployment rate has also stayed stable at a low level in recent months. However, inflation remains somewhat elevated.

The committee reaffirmed its commitment to achieving maximum employment and maintaining a long-term inflation target of 2%. While noting that risks to employment and inflation goals are balanced, it emphasized that the economic outlook remains uncertain.

Additionally, the Federal Reserve will continue reducing its holdings of Treasury securities and agency debt. The committee also reiterated its readiness to adjust monetary policy as needed to support economic stability.

This marks the first time interest rates have remained steady since the July meeting. The decision follows the Fed’s initiation of a monetary easing cycle in September 2024, beginning with a 50-bps cut, followed by two additional reductions of 25 bps each. This comes despite US President Donald Trump’s call for further rate cuts.