WASHINGTON: The US Federal Reserve began two days of interest rate discussions Tuesday, with analysts overwhelmingly expecting a pause to cuts as they wait for the new Trump administration to make policy.
The first day of deliberations began at 8:30 am (1330 GMT) local time in Washington on Tuesday, as scheduled, the Fed said in a statement. Its decision will be published at 2:00 pm local time Wednesday.
The Fed, which has a dual mandate to tackle both inflation and employment, cut rates by a full percentage point over three consecutive meetings at the end of last year, as policymakers turned attention from lowering inflation to supporting the labor market.
That left its benchmark lending rate at between 4.25 and 4.50 percent.
Fed to hold rates steady at an unsteady moment
An uptick in inflation at the end of 2024 away from the bank’s long-term target of two percent, and uncertainty over the direction of policy under new US President Donald Trump, should keep them on pause this month, analysts predict.
“Following a cumulative 100bps (basis points) of policy easing in 2024, policymakers will slow the recalibration process as they feel their way to a neutral policy stance and navigate potential policy shifts and the associated upside risks to the inflation,” EY chief economist Gregory Daco wrote in a note to clients.
Financial markets assign a probability of more than 99 percent that the Fed will remain on pause this week, and a probability of around 70 percent that it will make no more than two rate cuts this year, according to data from CME Group.
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