"New Federal Reserve News Agency": Both inflation and growth are uncertain, the Federal Reserve enters a "wait and see" mode

Wall Street Journal reporter Nick Timiraos pointed out that the Federal Reserve has paused its consecutive interest rate cuts and entered a wait-and-see phase to assess whether further rate reductions are necessary.

On Wednesday, the Federal Reserve paused interest rate cuts, maintaining the benchmark federal funds rate at around 4.3%, a significant decrease from 5.3% in September last year. Federal Reserve Chairman Jerome Powell stated at a press conference that since the current interest rate level has relaxed compared to last year, there is "no rush to adjust the policy stance."

Timiraos noted that this statement implies that the Federal Reserve may not take new actions at the March meeting, and whether further rate cuts will occur will depend on the actual progress of inflation or unexpected weakness in the labor market.

Timiraos cited market analysts who believe the Federal Reserve faces two core issues: first, whether inflation will fall to the 2% target level as expected in the next year or two, and second, whether the current interest rate level still significantly constrains economic activity. Some officials still believe the current policy is "highly restrictive," but whether further adjustments are needed remains to be seen.

The Federal Reserve's pause on interest rate cuts has drawn dissatisfaction from U.S. President Trump, who accused the Federal Reserve of failing to effectively control inflation and promised to curb price increases by unleashing American energy, reducing regulations, adjusting international trade, and revitalizing manufacturing. Powell did not directly respond to Trump's previous requests for rate cuts, reiterating that the Federal Reserve's decisions will be based on objective economic data analysis, unaffected by political factors.

The market reacted cautiously, with U.S. stocks declining throughout the day on Wednesday, and the downward trend showed no significant relief after the Federal Reserve announced it would maintain interest rates. The yield on the 10-year U.S. Treasury bond rose slightly to 4.554%.

Although Powell is optimistic about inflation continuing to slow in the coming months, he emphasized that the Federal Reserve wants to see actual data confirming this trend, not just forecasts. He stated, "We seem to be in a favorable position to achieve further declines in inflation, but actually achieving that is key."

The minutes from the December meeting showed that most Federal Reserve officials expect rate cuts this year, but there are differing views on the number of cuts. Compared to the four rate cuts predicted in September last year, most officials now believe there may only be two cuts by 2025, provided the trend of declining inflation continues.

Former Federal Reserve Vice Chairman and current Pimco senior advisor Richard Clarida analyzed that the Federal Reserve may have two options: if inflation continues to approach 2%, rate cuts could begin as early as spring; but if inflation proves to be more stubborn than expected, the Federal Reserve may not adjust rates at all this year. Citigroup Chief Economist Nathan Sheets believes the Federal Reserve is "feeling its way forward."