Fed Holds Rates Steady, Signals Extended Pause as Economy Stays Resilient

The U.S. Federal Reserve kept its benchmark interest rate unchanged at 3.50%–3.75% following a two-day policy meeting, with Chair Jerome Powell pointing to continued economic strength and easing risks to both inflation and employment. Policymakers voted 10–2 in favor of holding rates, suggesting confidence that current policy is well positioned while they assess incoming data. Powell noted that although risks remain, the economy has repeatedly shown resilience, reducing urgency for immediate rate cuts.

The Federal Open Market Committee gave no clear timeline for future easing, stating that the “extent and timing” of any further adjustments will depend on how inflation and the labor market evolve. Inflation remains above the Fed’s 2% target but has shown signs that tariff-related pressures could fade later this year. At the same time, labor market conditions appear to be stabilizing, with policymakers no longer signaling heightened concern about employment downside risks.

Financial markets had widely expected the pause, and attention also turned to leadership uncertainty at the central bank, with Powell’s term as Fed chair ending in May. While declining to address political pressures directly, Powell emphasized that central bank leadership should remain independent of elected politics and accountable to Congress. Analysts now anticipate the next potential rate cut could come midyear, depending on whether inflation shows clearer progress toward target.

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