US Fed Meeting Highlights: Sensex, Nifty rise after Powell-led FOMC keeps interest rates steady

US Fed Meeting Highlights: The US Federal Reserve announced its first policy decision for 2024 after a two-day Federal Open Market Committee (FOMC) meeting today and voted unanimously to hold the benchmark interest rates unchanged at 4.25 - 4.50 per cent, broadly in line with Wall Street estimates. 

The rate pause comes because officials seek further progress on inflation. This is the first interest rate decision of the US central bank since Donald Trump took charge as the 47th US President on January 20. US Fed had lowered the key overnight interest rates by a full percentage point in the final months of 2024.

US Fed chair Jerome Powell-led rate-setting panel conveyed a more deliberate approach to interest rate decisions. “With our policy stance significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said in a post-policy press conference.

Also Read: US Fed holds benchmark rates steady at 4.25-4.50% in first policy verdict of Trump Presidency; 5 key highlights

In the December policy meeting, US Fed policymakers voted 11 to 1 to slash the benchmark interest rate by 25 basis points (bps) or (1/4) quarter of a percentage point to 4.25 - 4.50 per cent. That was the US central bank's third straight interest rate cut of 2024 and the second straight 25 bps rate cut. Then, the US Fed had envisioned only two rate cuts in 2025 after inflation prints revealed that consumer prices remained ‘somewhat elevated’.

The US Federal Reserve has a dual mandate to act independently and keep inflation and employment in check, primarily by raising and lowering short-term interest rates. Experts believe that under Trump's presidency, there has been a distinct shift in the dynamics between the administration and the US Fed.

After raising the policy rate by 5.25 percentage points since March 2022 in one of the swiftest Fed reactions to combat the worst outbreak of inflation in 40 years, the central bank held the rate on hold between July 2023-2024 to anchor in high inflation and consistently bring it down toward the two per cent target range.