The Federal Reserve sees no need to forge ahead with further rate cuts. The US central bank has long been grappling with a Hamlet-like dilemma: to cut or not to cut the funds rate. Has the central bank hit a dead end?

According to Federal Reserve Chairman Jerome Powell, cutting interest rates too quickly could slow down progress in curbing inflation in the US. Previously, the policymaker warned that "excessive easing of monetary policy could undermine progress in lowering inflation." Such an outcome would be extremely unwelcome, he pointed out.

The Fed Chairman also noted that a lack of timely rate cuts could trigger an unnecessary deterioration in economic activity and employment. Ultimately, Jerome Powell added that all monetary policy decisions will be based on an assessment of macroeconomic data, economic outlook, and the balance of risks.

In the final quarter of 2024, the Federal Reserve announced three rounds of monetary easing, bringing the federal funds rate to a range of 4.25%–4.5% per annum. In January 2025, the key interest rate remained unchanged. The central bank noted that labor market conditions in the US are healthy, while consumer inflation is ‘slightly elevated.’

Interestingly, the US President also revised his stance on rate cuts. Previously, President Donald Trump had been a vocal critic of Powell. Trump advocated for his involvement in monetary policy decisions and slammed the Fed Chair for his hesitation on rate cuts. However, Trump has defined the Fed’s latest decision as the right move, despite recently insisting on an "immediate reduction in interest rates."