Fed Holds Rates Steady as Stock Markets React to Economic Projections
U.S. stock markets showed volatile behavior after the Federal Reserve announced an unchanged interest rate policy. Forecast cuts are expected, albeit at a slower pace. While economic challenges loom due to tariffs and geopolitical tensions, initial jobless claims remain a concern despite a drop in unemployment applications.
The Federal Reserve maintained its interest rates on Wednesday, with the decision resulting in volatile movements across major U.S. stock indexes. Investors initially saw gains following the announcement, but stocks soon reverted to prior levels as economic projections suggested slower rate cuts in coming years.
Policymakers plan to reduce rates by half a percentage point this year, followed by incremental quarter-point cuts in 2026 and 2027. Concerns about inflation driven by tariffs and slower economic growth were highlighted, with the decision to keep rates unchanged unanimously agreed upon among Fed members.
Market dynamics were influenced by additional geopolitical tensions, particularly in the Middle East. Meanwhile, jobless claims data indicated a slight decrease in new unemployment applications, though underlying labor market momentum remained sluggish. The day's stock performance showcased a strong lead for advancing issues over decliners, reflecting a cautious yet optimistic market sentiment.
(With inputs from agencies.)
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