The Fed Announces Pause on Rate Cuts

The Federal Reserve recently announced a pause on rate cuts at the end of a January meeting, holding the federal funds rate between 4.25% to 4.5%, the National Association of Home Builders (NAHB) reports.

The Fed notes the economy remains solid and specified a data dependent pause. The central bank says it will consider readings on labor market conditions, inflation pressures, inflation expectations and financial and international developments in future assessments of monetary policy. 

Housing market activity appears to be stable, according to Chair Powell, but shelter inflation is currently higher than average, at a 4.6% annual growth rate. These costs are likely driven by cost challenges for builders, like financing costs, regulatory burdens, rising insurance costs and a structural housing deficit.

The statement issued in January acknowledged the central bank’s dual mandate, noting its continued assessment of the “balance of risks.” The Fed emphasized its commitment “to support maximum employment and return inflation to its 2% objective.”