The Federal Reserve on Wednesday left its benchmark interest rate unchanged at 3.5% to 3.75%, as officials weighed sticky inflation, softer labor data, and uncertainty tied to the war with Iran.
Rate decision
The Federal Open Market Committee voted 11-1 to hold rates steady.
Governor Stephen Miran dissented in favor of a quarter-point cut, while Governor Christopher Waller, who had backed a cut in January, voted to hold this time.
The Fed’s statement made only limited changes to its economic assessment, though officials raised their 2026 growth and inflation projections.
The committee also said the economic fallout from the Middle East conflict remains unclear:
“The implications of developments in the Middle East for the U.S. economy are uncertain.”
Updated outlook
The Fed’s latest dot plot showed policymakers still expect one rate cut this year and another in 2027.
Still, seven of the 19 participants now expect no cuts at all in 2026, up from six in December.
The longer-run policy rate was projected around 3.1%.
Officials now see U.S. gross domestic product rising 2.4% this year and 2.3% in 2027.
Political pressure
The meeting unfolded under mounting pressure from President Donald Trump, who has repeatedly urged Chair Jerome Powell to cut rates.
Powell’s term is set to end in May, and Trump has nominated former Fed Governor Kevin Warsh to succeed him.
At the same time, Powell is fighting a legal dispute after U.S. Attorney Jeanine Pirro subpoenaed records tied to the Fed’s headquarters renovation.
