The US Federal Reserve maintained its benchmark interest rate on Wednesday, pointing to persistent inflation and robust economic expansion, while offering scant clues on the future trajectory of borrowing costs.
Policymakers noted that “economic activity has been expanding at a solid pace” in their statement, following a 10-2 vote to keep the central bank’s benchmark rate within the 3.50%-3.75% range after a two-day meeting.
Governors Christopher Waller and Stephen Miran, the latter currently on leave from his role as an economic adviser at the White House, dissented from the majority, both favoring a quarter-percentage-point rate cut.
Waller is considered a potential successor to Fed Chair Jerome Powell, whose term concludes in May.
The Fed’s statement provided no indication of when further reductions in borrowing costs might occur, stating that “the extent and timing of additional adjustments” to the policy rate would be contingent on incoming data and the broader economic outlook.
Inflation, the central bank observed, “remains somewhat elevated,” even as the job market has “shown some signs of stabilization.”
While the Fed acknowledged that “job gains have remained low,” it removed previous language concerning rising downside risks to employment, suggesting a reduced concern among policymakers regarding a rapid downturn in the labour market.
Ahead of this week’s meeting, Fed policymakers had largely characterised the job market as being roughly in balance, with smaller gains aligning with slower growth in the number of job seekers, partly attributed to stricter immigration policies implemented by the Trump administration.
The unemployment rate in December stood at 4.4%.
The decision to hold rates places the Fed’s current monetary easing cycle, which began towards the end of the Biden administration and resumed after a nine-month pause during President Donald Trump’s second term in the White House, on hold once more.
This follows three-quarter-percentage-point reductions during the central bank’s final three meetings of 2025.
Divisions within the Federal Open Market Committee were evident in the December 9-10 rate cut, where three of its 12 voting members dissented – one advocating for a deeper cut and two opposing any reduction. These divisions have persisted into 2026. Recent economic data has done little to sway officials concerned that inflation is not progressing towards the central bank’s 2% target, nor those worried about a potential rise in the unemployment rate if credit conditions are not eased to stimulate spending and investment.
This ongoing debate is expected to influence the initial weeks in office for whoever is appointed to succeed Mr Powell in the top Fed role, a decision President Trump is anticipated to announce shortly. The new chair is expected to be in place for the central bank’s June 16-17 policy meeting, with investors currently anticipating rates to remain unchanged until then.