What was likely the Federal Reserve's interest rate policy in early 1975?

In early 1975, the Federal Reserve's interest rate policy was likely to cut interest rates. During this period, the U.S. economy was facing significant challenges, including a recession that began in late 1973 and was worsened by the 1974 oil crisis. To stimulate economic growth and combat increasing unemployment, the Federal Reserve would have aimed to lower borrowing costs by cutting interest rates. Lower rates encourage spending and investment, which can help lift an economy out of a downturn.

Raising interest rates would typically be a move to control inflation but would not align with the economic circumstances of early 1975 when inflation was subsiding, and economic growth was sluggish. Maintaining current interest rates would not have provided the necessary stimulus needed to encourage recovery in a struggling economy. Implementing a fixed rate is not a typical action of the Federal Reserve, as they generally adjust rates in response to economic conditions rather than fixing them for extended periods. This context makes cutting interest rates the most appropriate action during this time.