FOMC Update - Jan 2025
January 29, 2025
Aligning with market consensus, the FOMC did not change its benchmark rate range from 4.25%-4.50%. The Fed stated “inflation remains somewhat elevated,” revising their initial statement: “inflation has made progress toward the Committee’s 2% objective.” Meanwhile, revisions were made to labor and unemployment statements from: “labor market conditions have generally eased and the unemployment rate has moved up but remains low”, to “the unemployment rate has stabilized at a low level in recent months and labor market conditions remain solid”.
Rates and Market:
- Fed Funds Target: 4.25%-4.50%
- Market Reaction: The S&P 500 was mostly unchanged, UST 10Y ticked 4bp higher. The market is pricing a 25% chance of a 25bp rate cut at the March 19, 2025 FOMC meeting and reduced Fed rate cuts in 2025 from 45bp to 42bp following the statement release.
The FOMC announced the following actions and analysis:
- Unanimous policy vote.
- The Fed stated they will remain focused on maximum employment and stable prices.
- The Fed will remain on hold and base future adjustments to target rate range based on further assessment of economic data, the evolving outlook, and balance of risks.
- The Fed will continue reducing its holdings of treasury securities, agency debt and agency MBS.