The Federal Reserve The central bank voted on Wednesday to take a break from its latest round of interest rate cuts as it resolves questions about its independence and waits for a new chief.
The central bank’s Federal Open Market Committee voted to keep the key interest rate in the range of 3.5%-3.75%, meeting market expectations. The decision halted three consecutive quarters of percentage point cuts, billed as a maintenance move to guard against a possible downturn in the labor market.
In voting to hold the line, the committee also weighed in on economic growth. It also downplayed concerns about the labor market compared to inflation.
“Available indicators show that economic activity is expanding at a steady pace. The growth of jobs has remained low, and the unemployment rate has shown some signs of stabilization,” Kazinform reports. post-meeting statement said. “Inflation remains at a rather high level.”
Importantly, in the statement, the committee deleted a point that indicated that the risk of a weakened labor market is greater than that of rising inflation. That calls for policy patience as officials see the Fed’s twin goals of low inflation and full employment in the balance.
There was little guidance on what would happen next, with markets expecting the Fed to wait at least until June before adjusting its benchmark rate again.
“In considering the size and timing of further adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook and the balance of risks,” the statement said, reiterating language introduced in December that markets see as a departure from the easing cycle that began in September 2025.
As in recent meetings, there were disagreements.
Governors Stephen Miran and Christopher Waller voted against the delay, both in favor of another quarter-point cut. Both were appointed by the president Donald TrumpMiran filed for a board seat whose term is not expiring in September 2025, and Waller was appointed during Trump’s first term. Miran’s term expires on Saturday, and Waller has interviewed for the Fed chairman’s job, but is considered a long-termer.
The routine nature of the decision comes when nothing is routine for the central bank.
A chair Jerome Powell he has two more appointments before the end of his term, capping a tumultuous eight years at the Fed that have included a global pandemic, a sharp recession and seemingly endless battles against Trump. He asks questions Click at 2:30 p.m. ET.
The Department of Justice recently subpoenaed Powell in connection with extensive renovations at the Fed’s headquarters in Washington, D.C. The president has previously threatened to fire Powell on several occasions and has actually moved to fire Gov. Lisa Cook, a case now pending before the US Supreme Court.
Underlining all the tension was the battle over the Fed’s independence, or its ability to operate without political interference. In confirming the Justice Department’s investigation, an unusually outspoken Powell linked the threat to Trump’s efforts to control monetary policy. Past presidents have also criticized the Fed’s decisions and tried to force policymakers to lower rates, but none have been as aggressive or public about it as Trump.
The Fed also has a difficult economic environment to navigate.
Growth, measured by the broadest measure, gross domestic product, has been steady. According to the Atlanta Fed, the third quarter advanced with 4.4% growth and the final three months of the year were tracked at a rate of 5.4%.
In addition, hiring is slow in the labor market amid the Trump administration’s crackdown on illegal immigration. However, layoffs were also low, with the trend in initial jobless claims at a two-year low.
However, inflation was more difficult. Despite its 40-year high in 2022, the rate is still close to 3%, short of the Fed’s 2% target, a concern among some FOMC officials who want to hold off on or eliminate rate cuts until there is more evidence that rate hikes have slowed.
Trump’s tariffs will operate against a backdrop of inflation, which Fed economists generally see as adding near-term pressure to lower tariffs later this year.
Futures markets peg at most two rate cuts in 2026 and none in 2027, regardless of the next Fed chairman. Speculation markets point to BlackRock bond chief Rick Reeder as a likely candidate to replace Powell.