The Federal Reserve opted to leave its benchmark interest rate unchanged in its first policy meeting since President Trump's inauguration.

The central bank’s decision to pause at its first meeting of 2025 followed a series of cuts that began in September to account for progress already made on getting inflation down. Over the course of three meetings, the Fed lowered rates by a full percentage point to a range of 4.25 percent to 4.5 percent, which was maintained on Wednesday.

Consumers and traders are waiting to learn if the Fed’s pause is a one-meeting hold or the start of a longer stretch.

President Trump has said he will "demand" lower interest rates, raising questions about his ability to influence the Federal Reserve.

Fed chair Jerome Powell said he has not talked with Trump since the president demanded last week “interest rates drop immediately.”

That’s the prediction of Bank of America economists who think Canada’s central bank will cut 25 basis points on Jan. 29 and then hold its key rate at 3 per cent. “We expect the forward guidance to signal a pause as the BoC waits to see how both domestic activity and U.S. trade policy play out,” said the economists led by Carlos Capistran.

There is so much uncertainty over potential tariffs and fiscal policy, “keeping things steady looks like the prudent move.”

Tech stocks led markets lower on Wednesday as the broader mood stayed muted after the Federal Reserve's latest interest rate decision saw the central bank keep rates unchanged in a range of 4.25%-4.5%.

The Federal Reserve held interest rates steady on Wednesday, just days after President Donald Trump called on the central bank to lower them. The announcement put the central bank on a potential collision course with Trump, though a longstanding norm of independence typically insulates the Fed from direct political interference.

Stocks pared losses after Jerome Powell eased Wall Street’s concerns about lack of inflation progress, saying a reference on that front in the Federal Reserve’s policy statement wasn’t meant to send any signal.

In December, economists believe the overall PCE index rose 0.3% on a monthly basis and 2.6% on an annual basis, according to FactSet’s consensus estimates. They anticipate that the core measure of PCE inflation, which excludes volatile food and energy prices, rose 0.2% on a monthly basis and 2.8% over the past year.