Egypt Daily News – The Federal Reserve kept US interest rates without changing today, during its first meeting during 2025 and during the Presidency of US President Trump.
The American interest rate is currently 4.25% to 4.5%, and it is in line with expectations.
Last year, the US Federal Reserve ended a reduction in interest rates by 0.25% at the December meeting for the third time in a row to reach a range of 4.25% and 4.5%, which was the last meeting during the Presidency of former President Joe Biden.
The inflation rate in the United States increased in December slightly more than expectations due to the high energy costs, indicating the continued high inflation that is in line with the expectations of the “Federal Reserve” to reduce the number of interest rates this year.
Labor Statistics Office said today, Wednesday, that the consumer price index increased by 0.4 % last December compared to the previous month, after an increase of 0.3 % in November, and on an annual basis, the consumer price index increased last December by 2.9 %, compared to With 2.7 % in the previous November.
But lately, the annual consumer inflation rate has crept slightly higher, causing the Federal Reserve to pause any additional rate cuts. The Federal Reserve noted that the job market remains strong, another key determining factor in whether to adjust interest rates.
Powell has said the Federal Reserve is trying to balance the need to reduce inflation while preventing the labor market from being stifled. In recent cases when interest rates increased, like they did in 2000 and 2007, a recession followed.
In December, Fed officials signaled they may reduce their rate just twice more this year. Goldman Sachs economists believes those cuts won’t happen until June and December.
In November, inflation was just 2.4%, according to the Fed’s preferred measure, not far from its 2% target. But excluding the volatile food and energy categories, core prices rose a more painful 2.8% from a year earlier. The Fed pays close attention to core prices because they are often a better guide to inflation’s future path.
Another reason for caution among Fed policymakers this year is that they will want to evaluate any changes in economic policy by the Trump administration. Trump has said he could slap tariffs of 25% on imports from Canada and Mexico as early as Feb. 1. During his presidential campaign he threatened to impose taxes on all imports.
The Trump administration has also said it will carry out mass deportations of migrants, which could push up inflation by reducing the economy’s ability to produce goods and services. At the same time, some economists say Trump’s promises to deregulate the economy could lower prices over time.
