Fed's 10-2 vote keeps rates in range between 3.50% and 3.75%, a widely expected result
The United States Federal Reserve decided this Wednesday to keep interest rates unchanged, placing the reference range between 3.50% and 3.75%, after a series of three consecutive cuts made in the last quarter of 2025. This pause responds to a combination of factors: still high inflation, the persistence of solid economic growth and a labor market with signs of stabilization, according to the statement issued after the meeting of the Federal Open Market Committee (FOMC).
The decision was adopted by a majority, with ten votes in favor and two against within the FOMC. The dissidents, Stephen Miran and Christopher Waller, both close to President Donald Trump — who has publicly pushed for faster, deeper rate cuts — argued for a further quarter-point cut. Waller also appears as a possible successor to Jerome Powell at the head of the Fed, whose term ends in May. Trump himself has declared that he is close to announcing the nomination of a new president for the entity, in a context of growing tension over the independence of the central bank.
Among the Fed's arguments, it stands out that economic activity is expanding at a good pace, while “inflation remains somewhat high.” Employment growth remains low, but the unemployment rate has shown signs of stabilization, standing at 4.4% in December. The entity removed references to greater risks to employment from its previous statement, reflecting less concern about a rapid decline in the labor market.
The statement emphasizes that the extent and timing of future adjustments in monetary policy will depend on incoming economic data and the evolution of the macroeconomic outlook. The Fed emphasizes that uncertainty remains high and that it is prepared to modify its stance if circumstances require it, especially observing trends in inflation, employment and the effects of international factors.
The pause in the cut cycle comes after a period marked by internal divisions, both at the Fed and in the political sphere. Only twelve of the committee's nineteen members have a vote, including the seven board members, the president of the New York Federal Reserve, and four rotating presidents of the regional banks. For this year, Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), Lorie Logan (Dallas) and Anna Paulson (Philadelphia) are part of the group with decision-making power and have expressed skepticism about the need for further immediate cuts.
In parallel, the Fed faces unprecedented pressure from the White House and Congress. Powell revealed that the Justice Department has issued subpoenas in the framework of a criminal investigation related to the reform of the bank's headquarters, a fact that the Fed chair described as an attempt to retaliate for the refusal to accelerate rate cuts. Additionally, the Supreme Court is considering Trump's attempt to remove Governor Lisa Cook for alleged mortgage irregularities, an unprecedented action in the Fed's century-old history.
Regarding economic projections, the Fed expects interest rates to be between 3.6% and 3.9% in 2025, declining progressively until reaching the target of 2% inflation in 2028. GDP growth was revised upwards, with 1.7% expected for 2025 and 2.3% for 2026. The unemployment rate would be 4.5% in 2025 and 4.4% in 2026. For its part, inflation would close 2025 at 2.9%, declining to 2.1% in 2027 and coinciding with the central bank's goal for 2028.
The decision to keep interest rates stable, in a scenario of internal divisions and external pressures, reinforces attention on the future leadership of the Fed and the evolution of monetary policy in the coming months.
(With information from AP, Reuters, EFE and Europa Press)
0 Comments