The U.S. Federal Reserve opted to leave its benchmark interest rate unchanged, maintaining the target range at 3.5% to 3.75%. The decision comes as central bank officials, led by Chair Jerome Powell, emphasized the ongoing necessity of Fed independence while acknowledging improving economic conditions.
At this meeting, policymakers voted 10–2 in favor of holding rates steady, with only two members backing a reduction and none supporting a rate increase. Powell dismissed the possibility of additional hikes, indicating that tighter policy is no longer the central scenario for the committee. Policymakers pointed to the continued strength in U.S. economic activity and noted that job growth remains modest but steady, with unemployment moving slightly lower.
Fed officials are closely watching how last year’s three rate reductions are affecting the broader economy. According to Powell, tension between employment and inflation has eased, further supporting the decision to keep rates unchanged. He noted that recent worries about a weakening labor market had surpassed inflation concerns during the latter half of 2025, prompting the rate cuts to encourage business borrowing and job creation.
Looking ahead, Powell said that policy decisions will be taken on a meeting-by-meeting basis, and no future moves have been decided. He made clear that the likelihood of rate increases is not under consideration. Addressing the impact of tariffs, Powell stated that most of the recent inflation pressures are linked to these “one time” price rises, as opposed to strong demand. If the influence of tariffs fades, the Fed could consider easing policy further.
