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10-year Treasury yield unchanged after Fed says inflation is ‘somewhat elevated'

Traders work on the floor of the New York Stock Exchange on Nov. 22, 2024.
NYSE

Traders work on the floor of the New York Stock Exchange on Nov. 22, 2024.

The 10-year Treasury yield was unchanged on Wednesday after the Federal Reserve kept interest rates unchanged at 4.25% to 4.50% in its first interest rate decision of 2025.

The yield on the benchmark U.S. 10-year Treasury rose shortly after the Fed's decision before slipping back to flat. It was last at 4.551%, while the 2-year Treasury yield added 2 basis points to 4.226%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

In a statement, the Fed's policymaking committee noted that "inflation remains somewhat elevated." It added: "The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid."

Traders widely expected the Fed to maintain rates at current levels leading up to the meeting.

President Donald Trump said he will "demand that interest rates drop immediately" during a speech last week before the World Economic Forum in Davos, Switzerland, last week. In a press conference that followed the Fed's decision, Fed Chair Jerome Powell said that he has had "no contact" with Trump since the newly inaugurated president made these remarks. The president and Powell have long had a contentious relationship, dating back to Trump's first term, despite Trump having appointed Powell Fed chair.

"The Fed must follow its legislative mandate," former Kansas City Fed President Esther George told CNBC in an interview Friday. "Congress has told us it is to bring prices to a low and stable level. In the long run, this institution has to think about those objectives rather than be swayed by outside commentary and political pressure that will come its way, as it has for its entire existence."

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