The Federal Reserve held interest rates steady for a third straight meeting as elevated inflation and a divided policy committee cloud the path ahead.
WASHINGTON — The Federal Reserve held its benchmark interest rate unchanged Wednesday for a third consecutive meeting, keeping the federal funds rate in a range of 3.5% to 3.75% as policymakers faced persistent inflation pressures and a more complicated economic outlook.
The decision itself was widely expected. The split behind it was not. The Federal Open Market Committee voted 8-4, marking the largest number of dissents at a Fed rate meeting since October 1992, according to CNBC’s report on the decision.
The division underscored the central bank’s difficult position: inflation remains above the Fed’s target, while officials are also weighing signs of a labor market that appears healthy but less robust. In its post-meeting statement, the committee said, “Inflation is elevated, in part reflecting the recent increase in global energy prices.”
One dissenter, Governor Stephen Miran, favored a quarter-point rate cut. Three regional Fed presidents — Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas — supported holding rates steady but objected to language that pointed toward the possibility of additional easing.
The disputed wording said the committee would assess incoming data, the outlook and risks when considering the “extent and timing of additional adjustments” to the federal funds rate. That phrasing suggested the next move could be lower, reflecting the Fed’s recent sequence of cuts and its broader easing bias since late 2025.
Markets had been pricing in no rate change ahead of the announcement and were not expecting another move for the rest of the year or well into 2027, CNBC reported. Fed officials in March had indicated they expected one cut this year and another in 2027, which would bring the rate closer to an estimated neutral level near 3.1%.
The vote came as Chair Jerome Powell nears the end of his tenure leading the central bank. He is due to step down from the chairmanship in mid-May, though his term as a Fed governor runs until January 2028.
Powell said at a news conference that he plans to remain on the Board of Governors until an investigation into Federal Reserve headquarters renovations is “well and truly over with transparency and finality.” He also congratulated Kevin Warsh after the Senate Banking Committee advanced President Donald Trump’s nomination of Warsh as the next Fed chair in a party-line vote.
The full Senate is expected to take up the nomination, setting up the Fed’s first leadership change since Powell became chair in 2018. Until then, investors and households will be watching whether inflation, energy prices and hiring data push the central bank toward a longer pause — or revive the case for another rate cut.
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