Fed Policy Stagnant: Discount Rate Maintains Position at Highest Level

The United States Federal Reserve decided to keep all interest rates unchanged at its latest meeting, reflecting the management’s confidence in the resilience of the US economy. This marks the first time since July that the Fed has not made any adjustments to interest rates, indicating a significant shift in their monetary policy strategy.

Powell Portrays a Solid Economy, Rate Cuts Still a Long Way Off

Chair Jerome Powell indicated that the US economy remains strong and inflationary pressures have eased as the labor market stabilizes. This optimistic outlook suggests that further interest rate cuts are likely to be delayed for some time. This extension of the status quo reflects the Fed’s cautious approach in responding to the still-uncertain global economic dynamics.

Federal Reserve Interest Rate Structure Remains Steady

The Federal Reserve maintained its main interest rate range at 3.50%–3.75% and the discount rate at 3.75%. Additionally, the rate on reverse repurchase agreements (RRP) also remains at 3.50%. The unchanged setting of these three rates demonstrates the Fed’s commitment to maintaining financial system stability while monitoring consumer price developments.

Stabilization Strategy Through the Discount Rate Remains Steady

The decision to keep the discount rate at the same level is an integral part of the Fed’s effort to manage monetary expansion prudently. According to market analysis (ChainCatcher), this move aligns with the central bank’s medium-term strategy to ensure sustainable economic growth without reigniting inflation. With the discount rate remaining stable, the Fed signals to the market that the period of monetary tightening slowdown has begun, but significant policy easing has not yet arrived.