The US Federal Reserve decided on Wednesday to keep its benchmark interest rates unchanged, as it awaits new developments that could reshape the economic outlook and inflation trajectory.
Fed Chairman Jerome Powell, speaking at a news briefing, confirmed that the target range for the federal funds rate remains between 4.25% and 4.50%, a level it has held since December.
“Looking ahead, the new administration is in the process of implementing significant policy changes in four key areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these changes that will impact the economy and influence the path of monetary policy,” Powell said.
While acknowledging recent developments, particularly in trade, Powell noted that uncertainty surrounding the changes and their potential impact on the economic outlook remains high.
The Fed Chairman emphasized that the central bank is not in a rush to alter its policy stance and is prepared to wait for greater clarity. However, he pointed out that surveys regarding the appropriate monetary policy by year-end suggest a possible easing to around 3.9%.
US stocks surged following the Fed’s assessment that the economy is robust enough to keep interest rates stable at their current level. The rally was also fueled by softer bond yields.
The Dow Jones Industrial Average rose 0.9%, while the S&P 500 gained 1.1%.
