US Federal Reserve keeps interest rates unchanged, says decision was ‘unanimous’

The move is expected to create some tension between the central bank the newly inaugurated president, who has contested that he should have some say in the Fed policy.

The Fed Reserve said that the interest rate will remain unchanged in the 4.25-4.50% range, noting that inflation remains “somewhat elevated, and economic outlook is uncertain”.

The announcement comes in the backdrop of China’s DeepSeek having a thronging effect on the US markets, triggering losses for several key corporations in America, including Nvidia.

Economic activity expanding at ‘solid pace’

The US central bank dropped from its latest policy statement language that inflation “had made progress” toward 2 per cent objective as it had in the December statement, a Reuters report said.

In terms of the unemployment rate, the Federal Reserve said that it has stabilised at a low level, adding that labour market conditions also remain “solid”.

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Meanwhile, the Jerome Powell-led agency noted that achieving employment and inflation goals are “roughly in balance”. It noted that the economic activity in the States has continued to expand at a solid pace.

The Fed said that the vote in favour of the policy to keep the rates steady was “unanimous”. Meaning that all 12 Federal Reserve officials who voted at this month’s meeting were in agreement of keeping the interest rates unchanged.

Notably, at last month’s meeting, Cleveland Fed President Beth Hammack had swayed away from the other 11 voters by siding with a rate pause rather than a quarter-point cut that actually took place.

However, this meeting did not see Hammack voting. He will be serving as an alternate voter for the rest of the year.

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Additionally, the recent inflation readings have remained about half a percentage point or more above the Fed’s target. The Fed officials have said that they largely believe the progress in lowering inflation will continue this year, but have now put the rates on hold as they await data to confirm it.

“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 central bank’s policy-setting Federal Open Market Committee said in a statement.

After the release of Fed’s statement, short-term interest rate futures showed that investors expect the central bank to hold off on cutting rates again until June, with US bond yields being little changed and stocks losing some ground.

(with inputs from Reuters, Bloomberg)