No change in interest rate: Here’s the outcome of US Federal Reserve meeting

The US Federal Reserve, led by Chair Jerome Powell, announced on Wednesday (Jan. 28) that the interest rate will remain steady. The decision on the central bank came after a two-day meeting. “In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 per cent,” FOMC said.

The Federal Open Market Committee (FOMC) considers various economic indicators, such as inflation trends and labour market conditions, before announcing interest rates. The decision means the federal funds rate, which serves as a benchmark for interest rates across the country, remains at a range of 3.5 per cent to 3.75 per cent.

There were a total of 12 voting members in the committee. 10 of them voted in favour of the decision. Voting against were Stephen Miran, who continued his streak of dissents, and Christopher Waller, who is seen as a potential candidate to become the next Fed chair.

Powell held a press conference after the announcement and said, “Available indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient, and business fixed investment has continued to expand. In contrast, activity in the housing sector has remained weak."

What was the impact of the shutdown?

“The temporary shutdown of the federal government likely weighed on economic activity last quarter,” Powell said. “Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people,” he added.

“Most of the overrun in goods prices is from tariffs. And that's actually good, because if it weren't from tariffs, it might mean it's from demand, and you know, that's a harder problem to solve. We do think tariffs are likely to move through and be a one-time price, so most of the overshoot, if if you were to take that out, you'd get and you would, I mean inflation, core PCE, inflation is running just a bit above 2% x the effects of tariffs on goods,” Powell said.