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COINTURK NEWS > Economy > Fed Holds Interest Rates Steady: What This Means for the Market
Economy

Fed Holds Interest Rates Steady: What This Means for the Market

In Brief

  • The Federal Reserve is likely to maintain interest rates at 4.5% for now.

  • Inflation concerns and Trump's policies complicate potential rate cuts.

  • Mortgage rates remain high, influenced by economic outlook and political uncertainty.

Fatih Uçar
Fatih Uçar 4 months ago
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The Federal Reserve (Fed) is expected to maintain interest rates at 4.5% in its upcoming announcement. Economists believe that a new rate cut may not arrive until May, which is concerning for investors in risky markets like cryptocurrency. Additionally, there are ongoing worries that President Donald Trump’s policies could exacerbate inflation.

Contents
Reasons Behind the Halt in Rate CutsImpact of Trump’s Administration and Mortgage Concerns

Reasons Behind the Halt in Rate Cuts

Fed Chairman Jerome Powell emphasizes that inflation remains above target levels, leading to a cautious approach regarding further rate cuts. Villanova University economist Erasmus Kersting states, “Inflation hasn’t completely vanished,” suggesting that lowering rates could potentially fuel price increases.

When to Expect Fed Interest Rate Decisions?

The Fed is also observing Trump’s tariffs and mass deportation policies, which experts fear may accelerate inflation. Consequently, the Fed has adopted a wait-and-see stance, closely monitoring political developments. Economists suggest that the current landscape may not change until spring, although any rate cuts could have long-term market implications.

Impact of Trump’s Administration and Mortgage Concerns

Despite last year’s rate cuts, mortgage rates remain distant from the 7% mark, as housing loan costs depend on both the federal funds rate and the broader economic outlook. Investors are paying close attention to 10-year Treasury yields. Economist Gregory Daco comments that political uncertainty shadows fiscal policies, with potential new tariffs or deportation measures likely to raise costs.

Last week, Trump called for rapid rate cuts at Davos; however, the Fed aims to maintain its independence. Powell previously stated that the president lacks the authority to demand his resignation before the end of his term, reinforcing the Fed’s autonomous position and sending a clear message to the markets.

Experts speculate that further rate cuts could occur by May or later, but a sudden spike in inflation might delay this timeline. Daco anticipates three separate quarter-point cuts within the year, contingent on inflation trajectory and political risks. The Fed’s cautious approach will keep the markets engaged for some time.

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Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.

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Fatih Uçar 29 January, 2025 - 12:06 pm 29 January, 2025 - 12:06 pm
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