Fed holds rates steady in first meeting since Trump’s presidency

There’s a band called The Hold Steady, and we can’t help but wonder if their phones blow up every time the Federal Reserve does its thing. (We know Jerome Powell’s a Deadhead, but that doesn’t mean he can’t expand his musical palate...)

In any case, the Fed and holding steady are likely going to become more and more synonymous in upcoming months. Sure, the central bank deviated recently: Starting in September 2024, the Fed cut rates three consecutive times. Even then, though, Jerome Powell was careful to stress that cuts wouldn’t necessarily continue at that pace or magnitude. “I do not think that anyone should look at this and say, ‘Oh, this is the new pace,’” Powell said in September.

He was right about that. This time around, the Federal Reserve kept borrowing costs at a range between 4.25% and 4.5%, a move that was widely anticipated. Now, it remains to be seen if this is the start of a period of halted rate cuts, or simply a one-off pause. When asked whether a rate cut in March was still a possibility, Powell said “the broad sense of the committee, actually, is that we don’t need to be in a hurry to adjust our policy stance.” (That’s Powell-speak for “yeah, no, but…maaaaybe…yeah, no.”)

While Wednesday’s decision was anticlimactic, the meeting was still notable, as it marked the first move from the central bank since the start of Donald Trump’s presidency. Like many organizations within spitting distance of President Trump’s reach, the Fed is once again the target of the verbal combativeness that’s characteristic of his leadership style.

Last week, in a virtual appearance at the World Economic Forum in Davos, Switzerland, Trump said he’d demand the Fed lower rates, though the Federal Reserve is an independent government agency, accountable only to the American people and Congress.

At Wednesday’s meeting, Powell maintained that he’s had “no contact” with Trump since then, and stressed the central bank’s independence.

“I’m not going to have any response or comment whatsoever on what the president said. It’s not appropriate for me to do so,” he said. “The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals and really keeping our heads down and doing our work.”