The recent decision by the Federal Reserve (Fed) to keep the key interest rate unchanged did not surprise the markets on Wall Street. The Dow Jones Index lost only 0.1 percent, while the S&P 500 remained virtually unchanged, and the Nasdaq Composite recorded a slight increase of 0.1 percent. This moderate market reaction suggests that the stability of the interest rate was expected.
Background of the Decision
The Fed kept the key monetary policy rate in the range of 4.25 to 4.50 percent, which met expectations. At the same time, the Fed lowered its growth forecast for the year 2025 and left open the possibility of interest rate cuts in the second half of the year. These measures reflect the current economic uncertainty, exacerbated by the Middle East conflict and other factors.
Market Reaction and Investor Behavior
The restrained market reaction can also be attributed to the general uncertainty due to geopolitical tensions. Investors are seeking clear signals from Fed Chair Jerome Powell, especially concerning future interest rate cuts that could affect the cryptocurrency market and other risk assets.
Outlook
An average key interest rate of 3.6 percent is expected by the end of 2026, indicating slow economic growth. The Fed plans to remain committed to its interest rate path and to implement a cut of a total of half a percentage point in 2025. These long-term plans could help investors adjust their strategies.
Overall, Wall Street shows a restrained reaction to the Fed’s decision, indicating the expected stability of interest rates and economic uncertainty. Investors are waiting for further signals from the Fed to support their decision-making.