The Federal Reserve (the Fed) held interest rates steady yesterday evening following three consecutive quarter-point cuts, reflecting a more complex policy backdrop, in line with Cebr expectations.
The labour market weakened over the second half of 2025 but has showed signs of stabilising, while inflation remains elevated.
Moreover, upside risks to inflation linger amidst indications of an economy running hot, with GDP growth amounting to an annualised 4.4% in Q3 and nowcasts pointing to a further acceleration in Q4 despite the government shutdown.
Against this backdrop, the Fed’s pause today likely reflects its preference to assess the transmission of earlier rate cuts and gather clearer signals on inflation and labour market conditions. Cebr
expects at least two further quarter-point cuts this year, though this outlook could shift depending on leadership changes at the Fed once Chair Powell’s term ends in May.
