Perhaps finance companies and dealerships can take solace in the seven-word sentence Federal Reserve chair Jerome Powell said during his opening statement on Wednesday after the Federal Open Market Committee (FOMC) decided to maintain the target range for the federal funds rate at 4.25% to 4.5%.

“We are not on any preset course,” Powell said.

In its own statement, the FOMC reiterated that in considering the extent and timing of additional adjustments to the target range for the federal funds rate, policymakers said they will carefully assess incoming data, the evolving outlook and the balance of risks.

The committee said it also will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities.

Policymakers added they still are strongly committed to supporting maximum employment and returning inflation to 2%.

Powell elaborated about all those ideas and objectives.

“We know that reducing policy restraint too fast or too much could hinder progress on inflation,” Powell said. “At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.  In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will assess incoming data, the evolving outlook, and the balance of risks.

“We are not on any preset course,” he continued. “As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals.  If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer.  If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly.

“Policy is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate,” he went on to say.

But what about the mandates at your shop? At your dealership to retail a certain number of used cars each month? At your finance company to book solid paper that will keep the portfolio healthy? Experts from Edmunds and Cox Automotive offered their Fed decision assessments through the prism of automotive.

“The Fed’s decision to hold interest rates steady could add a layer of uncertainty for car shoppers who have already been grappling with affordability challenges in the form of rising vehicle prices and high borrowing costs over the past couple of years,” Edmunds head of insights Jessica Caldwell said in a message to Cherokee Media Group.

“Modest dips in new auto loan interest rates, combined with the return of incentives on new vehicles likely helped ease holdout shoppers into more of a buying mood in Q4 2024 — sparking some optimism not seen since before the inventory crunch,” Caldwell continued. “But with rates no longer trending downward and additional market pressures on the horizon — including the potential for new tariffs under the presidential administration — shopper sentiment could take a bit of a turn.

“While today’s decision isn’t a drastic shift in direction, it could add to any hesitancy consumers might be feeling before making a new vehicle purchase,” she went on to say.

Through his blog posted after the Fed decision, Cox Automotive chief economist Jonathan Smoke reported that the average rate for used cars financed in December increased 48 basis points to 13.88%. But that’s 32 basis points lower than a year earlier.

“The possibility of higher rates, along with the possibility of higher vehicle prices from tariffs, changes buyer psychology. It is no longer the case that waiting to buy could produce a better deal or better payment. Therefore, the market’s current momentum may not change,” Smoke wrote.

“While the rate direction is uncertain, I suspect that the next few months could see the best rates for the year if lenders see market potential along with declining risk,” Smoke continued. “Lender confidence in the economy and in future used-vehicle value trends, along with improving loan performance this spring, could see them reduce yield spreads, which is the premium over their cost of capital to compensate for risk. If so, auto loan rates may still decline despite the Fed and the bond market. However, the possibility for large declines has diminished.

“Tax refund season began this week, and tax refunds typically lead to improving loan performance and increased demand for vehicles. By the time the Fed announces its next policy decision on March 19, we should see evidence of the impact of this year’s tax refund season,” he went on to say. “The rate direction should be clearer by then.”

Comerica Bank chief economist Bill Adams and senior economist Waran Bhahirethan revised their interest-rate forecast to predict just one quarter percentage point rate cut by the Fed this year, down from two cuts prior to Wednesday’s announcement.

“Comerica forecasts for the Fed to hold the Fed funds rate steady through mid-2025, then cut the rate a quarter percent in July as they end the run-off of their Treasury and mortgage-backed security holdings,” Adams and Bhahirethan wrote in their analysis. “The federal funds rate is then forecast to hold steady through the first quarter of 2026. The 10-year Treasury yield is forecast to average between 4.25% and 4.75% in 2025 as a steeper yield curve offsets the effect of modestly lower short-term interest rates.”