The US Federal Reserve unanimously kept interest rates steady in the 4.25%-4.50% range, it said in a statement yesterday, as they assess the impact of Trump’s economic policies on inflation and growth. The decision ends the Fed’s cutting spree, which brought rates down a full percentage point last year, including a 50 bps cut in September, followed by 25 bps reductions in November and December.

A predictable outcome: The decision was one of the “most predictable no change” moves in recent years, Bloomberg reports, citing DoubleLine Capital’s Jeffrey Gundlach. A Reuters poll of economists echoed the same sentiment earlier this month as better-than-expected data for inflation and the jobs market signalled the economy does not need further stimulus.

Bracing for the Trump effect: While holding off on a rate cut for now, the Fed remains flexible as it evaluates the impact of the anticipated tariffs on Canadian and Mexican imports, the Associated Press reported. Policymakers are wary, recalling that past tariffs slowed growth more than they raised prices. Analysts also warn that widespread tariffs and mass deportations could fuel inflation, which stubbornly remains above the Fed’s 2% target.

Trump is not happy: US President Donald Trump took to social media to lash against the Fed’s presumed failure in stopping “the problem they created with Inflation”. The newly-inaugurated president vowed to take matters into his own hands. “I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing,” he wrote in a post on Truth Social. Trump has been pushing for lower rates for a while now, claiming he should have a say in Fed policy. “I’ll demand that interest rates drop immediately, and likewise, they should be dropping all over the world,” he said earlier at Davos.

Less cuts this year? Analysts suggest we are in for a slower pace of reductions as the rates hover near the neutral zone, where monetary policy neither stimulates nor restricts growth. Meanwhile, Powell signalled repeatedly in the press conference that the Fed intends to wait for the Trump administration’s policies to be articulated and implemented, before assessing their implications and deciding on the next step. “Chair Powell very clearly indicated that the first phase of rate calibration is behind us. They’re in no hurry to move into the next phase,” Kathy Bostjancic, chief economist at Nationwide told Bloomberg.

MARKETS THIS MORNING-

Asian markets are broadly in the green in early trading this morning, although a handful of them — including Taiwan, Hong Kong, South Korea, and China — are closed for the Lunar New Year. Japan’s Nikkei is up around 0.2% so far.

Over on Wall Street, futures indicate the S&P 500, Dow Jones, and Nasdaq will all open in the green despite all three indexes closing down at the end of yesterday’s trading.

EGX30

29,892

+0.8% (YTD: +0.5%)

USD (CBE)

Buy 50.17

Sell 50.30

USD (CIB)

Buy 50.18

Sell 50.28

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,439

+0.2% (YTD: +3.4%)

ADX

9569

+0.2% (YTD: +1.6%)

DFM

5129

-0.9% (YTD: -0.6%)

S&P 500

6039

-0.5% (YTD: +2.7%)

FTSE 100

8558

+0.3% (YTD: +4.7%)

Euro Stoxx 50

5231

+0.7% (YTD: +6.8%)

Brent crude

USD 76.58

-1.2%

Natural gas (Nymex)

USD 3.54

+1.8%

Gold

USD 2,798.30

+0.2%

BTC

USD 103,780.80

+3.4% (YTD: +10.7%)

THE CLOSING BELL-

The EGX30 rose 0.8% at yesterday’s close on turnover of EGP 5.0 bn (32.2% above the 90-day average). Local investors were the net buyers. The index is up 0.5% YTD.

In the green: Heliopolis Housing (+6.7%), GB Corp (+2.7%), and TMG Holding (+2.2%).

In the red: B Investments (-2.4%), Alexandria Mineral Oils Company (-1.7%), and CIB (-0.3%).

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