The US Federal Open Market Committee will hold the target federal funds rate at 4.25 per cent to 4.5 per cent, the US central bank announced this afternoon.

The widely expected news followed the conclusion of the FOMC’s two-day meeting, its first under the new Trump Administration.

At a press conference today, US Federal Reserve chairman Jerome Powell said: “In support of our goals, today the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.”

He said the American economy was strong overall and had made significant progress towards its goals over the past two years.

“Labour market conditions have cooled from their formerly overheated state and remain solid,” Mr Powell said. “Inflation has moved much closer to our 2 per cent longer-run goal, though it remains somewhat elevated.”

He said recent indicators suggested that economic activity has continued to expand at a solid pace.

“For 2024 as a whole, our gross domestic product looks to have risen above 2 per cent, bolstered by resilient consumer spending,” Mr Powell said.

Meanwhile, investment in equipment and intangibles seemed to have slowed in the fourth quarter, but was strong for the year overall.

The pause in changing the interest rate was the first since last September, when the FOMC launched its first rate cut since the start of the pandemic in 2020.

The FOMC announcement noted unemployment had stabilised at a low level while inflation remained somewhat elevated.

The move came despite President Donald Trump’s promises last week to “demand” that the interest rates drop immediately.

Today, in a webinar on what to expect from financial markets this year, LOM investment experts, James Balfour and Bryan Dooley, said inflation was trending lower, but the last mile to the Fed’s goal of 2 per cent had been elusive.

Shortly before Mr Powell’s press conference this afternoon, Mr Balfour said the Fed had the dual purpose of getting inflation down, and also making sure that employment was good.

“They have seen slight increases in the pressures on unemployment,” he said.

The LOM executive said last year was a strong year for earnings growth, and this year looked set to be the same.

“Every market seems to be picking up growth,” Mr Balfour said.

However, he said it remained to be seen what impact Mr Trump’s deportation policies would have. During his first week in office Mr Trump signed ten executive orders on immigration and issued several edicts to carry out mass deportations.