Investors Await FED’s First Rate Decision of 2025

With global markets experiencing high volatility, attention now turns to the Federal Reserve’s (FED) policy announcement on January 29, 2025.

Investors across stocks, gold, crypto, and forex are eager to see if the central bank will maintain its stance or signal further rate cuts.

Since September 2024, the FED has been easing rates, starting with a 50-basis-point cut, followed by two 25-basis-point reductions in November and December. Despite this trend, analysts expect no changes in January, with FED Watch pricing a 99.5% probability of rates staying put. However, speculation is growing that the first cut of 2025 could come by June.

While the labor market appears stable, analysts at LHMeyer warn that restrictive monetary policy is still affecting economic growth. They expect rates to stay above 4% until mid-2025, with inflation at 2.5%. However, this won’t likely stop the FED from continuing rate cuts.

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According to Crédit Mutuel Asset Management, a neutral or slightly positive market reaction is likely if rates remain unchanged. However, Danske Bank analysts believe market focus may shift towards political developments under the Trump administration, potentially overshadowing the FED and European Central Bank (ECB) meetings.

Following the announcement, FED Chair Jerome Powell will deliver a press conference at 22:30 Turkish time, offering insights into the central bank’s future policy direction.

Alexander Zdravkov