The Fed kept interest rates unchanged this week, holding them in the 3.5%–3.75% range after several cuts last year. That move was widely expected. The more important takeaway was the message behind it: the Fed isn’t rushing into the next cut.
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Fed Chair Jerome Powell said rates are now close to a normal level for the economy. Inflation has eased but remains above target, and the job market — while cooling — is still holding together. As a result, the Fed is taking a cautious, meeting-by-meeting approach rather than signaling near-term easing. Markets now see little chance of a March cut, with later in the year looking more plausible if inflation continues to trend lower.
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Adding to the backdrop, President Trump has formally nominated Kevin Warsh to succeed Powell when his term ends in May. Markets view Warsh as experienced and credible, not someone likely to force abrupt changes. While Trump has been vocal about wanting lower rates, policy decisions are made by committee, limiting the scope for politically driven swings.
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Bottom line: the Fed is signaling patience. Any rate cuts ahead are likely to be gradual and dependent on clear progress in inflation and employment — not on urgency or leadership headlines.

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