The US Federal Reserve left its benchmark interest rate unchanged at 3.50% to 3.75% on Wednesday, in line with market expectations.
The decision followed the central bank’s two-day policy meeting and comes after three rate cuts in late 2025.
The Federal Open Market Committee said economic activity continues to expand at a solid pace. However, job gains have moderated and inflation remains somewhat elevated.
Fed projections signal limited rate cuts ahead
Alongside the decision, the Fed released its latest Summary of Economic Projections. The median forecast shows one rate cut over the policy horizon.
Most policymakers expect either no change or a single reduction by the end of 2026. No members projected a rate increase this year.
The projections indicate a more cautious stance as inflation remains above the central bank’s 2% target and labour market conditions soften.
Oil prices add to inflation uncertainty
The Fed noted that uncertainty remains elevated, including risks linked to global developments.
The recent rise in oil prices, driven by tensions in the Middle East, has added to inflation pressures. Higher energy costs could weigh on consumer spending and complicate the inflation outlook.
Policymakers said they remain attentive to risks on both sides of their dual mandate of price stability and maximum employment.
Powell expected to reinforce wait-and-watch approach
The rate decision was approved by an 11–1 vote, with one governor dissenting in favour of a 25 basis point cut.
Fed Chair Jerome Powell is scheduled to speak at 2:30 PM ET. He is expected to reiterate that the central bank will remain on hold while assessing incoming data and the impact of recent developments.
The Fed’s next policy moves will depend on the trajectory of inflation, labour market conditions, and global factors, including energy prices.