Fed Stops Interest Rate Adjustments, Discount Rate Remains Stable

In the latest meeting, the Federal Reserve announced a strategic decision to keep the federal funds rate at 3.50%–3.75%, marking the first time since July that the U.S. central bank has not made an adjustment. This decision aligns with a consistent implementation of the discount policy, reflecting the Fed’s commitment to managing long-term economic stability.

Jerome Powell Signals Sustainable Economic Growth

Federal Reserve Chair Jerome Powell stated that the structure of the U.S. economy continues to show strong fundamentals. With inflation beginning to come under control and the labor market remaining solid, the Fed views this situation as not requiring additional interest rate adjustments in the near future. Powell emphasized that any further rate cuts will be considered carefully and gradually, in line with the evolving economic data.

The Discount Policy as a Pillar of Monetary Stability

In addition to maintaining the federal funds rate, the Fed also held the reverse repurchase agreement (RRP) rate at 3.50% and the discount rate at 3.75%. The discount policy is a key instrument that allows the Fed to control market liquidity and keep inflation pressures manageable. By maintaining these three interest rate parameters at stable levels, the Fed aims to create a conducive monetary environment for sustainable growth without triggering new inflation risks.

Strategic Implications for Markets and Investors

The decision to keep the discount policy and interest rates generally indicates that the Federal Reserve is adopting a wait-and-see approach. This strategy signals to the market that there is no urgent pressure for policy adjustments in the short term. Investors and market participants can anticipate that monetary dynamics will remain stable, allowing them to plan investment strategies with greater certainty.