This pause follows the one already decreed last January and the three consecutive reductions that began in September, when the price of money was reduced for the first time since March 2020.
The Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) decided this Wednesday to keep interest rates within the target range of 4.25% to 4.50%.
This pause follows the one already decreed last January and the three consecutive reductions that began in September, when the price of money was cut for the first time since March 2020.
In its statement, the bank emphasized that uncertainty about the economic outlook "has increased," so the central bank's governing body will continue to monitor the risks to employment and inflation.
"Recent indicators suggest that economic activity has continued to grow at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated," the Fed summarized.
The FOMC has indicated that, when changing the reference rate, it will be attentive to the impact of incoming data on the macroeconomic environment and the balance of risks.
In this regard, the issuing institution has assured that it will be "prepared" to adjust rates if necessary, for which it will analyze readings on the labor market, inflation, and the effects of international and financial events.
The Fed has modified its balance sheet reduction plans, as it will now reduce the reinvestment of maturing Treasury bond principal from $25 billion to $5 billion.
However, mortgage securitizations will remain at the current US$35 billion.
The Federal Reserve's decision was met with dissent from one of its members, Christopher Waller, who was in favor of keeping interest rates unchanged but favored continuing the previous pace of balance sheet reduction.
ECONOMIC FORECASTS
The Fed also released its updated macroeconomic forecasts, as well as its members' estimates of interest rate developments.
In December, FOMC members expected rates to end 2025 at between 4% and 4.25%.
The dot plot now shows that the majority of its members continue to bet on this figure, but others are opting for higher levels.
The Fed's central projection calls for interest rates in the 2025 range of 3.9% to 4.4%, compared to the December projection of 3.6% to 4.1%.
For 2026, the forecast is for the range to be between 3.1% and 3.9%, compared to the previous forecast of 3.1% and 3.6%. In 2027, the range will be between 2.9% and 3.6%.
Regarding macroeconomic developments, the issuing institute has worsened its outlook. It has revised the country's GDP growth in 2025 downward by four-tenths of a percentage point, to 1.7%.
Growth forecasts for 2026 have since been revised down by two-tenths of a percentage point, to 1.8%, and for 2027 by one-tenth of a percentage point, to 1.8%.
Regarding unemployment, the Fed estimates the country's unemployment rate will reach 4.4% in 2025, one-tenth of a percentage point higher than the estimate three months ago. For the following two years, it will remain stable at 4.3%.
Meanwhile, inflation will be 2.7% at the end of the year, two-tenths of a percentage point higher than in December, while the underlying variable, which excludes energy and food prices due to their greater volatility, will be 2.8%, three-tenths of a percentage point higher.
In 2026, the headline and core rates will be 2.2%, up one-tenth of a percentage point and unchanged, respectively, while in 2027, both the headline and core rates will be 2%.
GDP, UNEMPLOYMENT AND INFLATION
The economy of the world's leading power experienced annualized GDP growth of 2.3% in the fourth quarter of 2024, compared to 3.1% in the previous three months.
Regarding the US labor market, 151,000 nonfarm jobs were created in February, up from 125,000 in January. Unemployment also rose by one-tenth to 4.1%.
The personal consumption expenditures price index, the Fed's preferred statistic for monitoring inflation, stood at 2.5% in January, down one-tenth of a percentage point.
The monthly rate registered an increase of 0.3%, unchanged. The underlying variable closed at 2.6% year-on-year, down three-tenths of a percentage point.
