The US Federal Reserve (FED) has announced its anticipated decision on interest rates during its first meeting of the year. According to a statement cited by Operative Information Center-OMM, the benchmark interest rate was kept steady in the 3.5-3.75% range by a vote of 10 to 2.
Board members Stephen Miran and Christopher Waller voted against the decision, favoring a 25-basis-point reduction in rates. In its official statement, the Federal Open Market Committee (FOMC) highlighted several key points regarding the current state of the economy and future objectives:
- Economic activity continues to expand at a "healthy pace";
- While employment growth remains low, signs of stabilization are observed in the unemployment rate;
- Inflation remains somewhat above target levels;
- The FOMC maintains its commitment to maximum employment and a 2 percent inflation target.
The FED had previously implemented a total of 75 basis points in rate cuts during September, October, and December of last year. Following three consecutive reductions, the institution opted for a pause at this year's inaugural meeting. Officials noted that uncertainty regarding economic prospects remains high. This monetary policy stance comes as US President Donald Trump continues to oversee the nation's economic trajectory since taking office in January 2025.
The Federal Reserve's decisions are closely monitored globally, as they influence international borrowing costs and commodity prices. For Azerbaijan, fluctuations in the US dollar and Fed policy impact global oil prices and the broader macroeconomic environment. The stability of the US dollar remains a significant factor for the Republic of Azerbaijan's energy-based economy and its sovereign wealth fund management.
