Fed holds rates steady

The Federal Reserve kept interest rates unchanged on Wednesday, holding the benchmark rate between 3.5% and 3.75%.

The move followed three consecutive rate cuts by 2025-end and signaled that the Fed is now in wait-and-watch mode.

The decision passed by a 10–2 vote, showing broad support among policymakers.

“Uncertainty about the economic outlook remains elevated,” the Fed said in a statement. However, Federal Reserve Chair Jerome Powell said, “Available indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient, and business fixed investment has continued to expand.”

He further added that recent data show early signs of labor-market stability.

While inflation has cooled from last year’s highs, it still sits above the Fed’s 2% target, giving officials little reason to rush. Powell said the Fed feels well-positioned and will act only if inflation falls more clearly or the job market weakens.

Markets barely reacted. Major stock indexes were flat, and the 10-year Treasury yield edged up to 4.25%. Investors had largely expected the decision. Some economists now believe the next rate cut may not come until after Powell’s term ends in May.

The Central Bank offered little guidance on future moves, saying it will rely on incoming data. Markets expect one or two rate cuts later this year. Fed Governors Christopher Waller and Stephen Miran dissented in favor of a quarter-point rate cut. Waller is reportedly on Trump’s short list to succeed Jerome Powell in May.