The U.S. Federal Reserve opted to keep interest rates unchanged on Wednesday, marking the fourth consecutive month of holding steady as policymakers await clearer economic signals before determining their next move.
Following a two-day policy meeting, the Federal Open Market Committee (FOMC) announced it would maintain the target range for the federal funds rate at 4.25% to 4.50%. The decision reflects the Fed’s cautious approach amid growing uncertainties surrounding the U.S. economic outlook.
In its official statement, the central bank reiterated that while inflation has cooled from its peak, it remains above the Fed’s 2% target, and further assessment is needed to determine if the current policy stance is sufficiently restrictive to return inflation to desired levels.
“Economic indicators have shown mixed signals in recent months,” the FOMC said. “Given the evolving conditions in the labor market and inflation trends, the Committee believes it is appropriate to maintain the current target range while monitoring incoming data.”
The central bank shifted its policy direction in late 2024 after a sustained period of aggressive rate hikes aimed at controlling inflation. In September 2024, the Fed made its first rate cut in more than a year, lowering the federal funds rate by 50 basis points to a range of 4.75% to 5.00%. That move was followed by two smaller 25-basis-point cuts in October and November.
By January 2025, the Fed settled on a holding pattern with rates at 4.25% to 4.50%, where they have remained since. Officials say they are balancing the need to support economic growth without reigniting inflationary pressures.
The U.S. labor market has shown signs of cooling, with job creation slowing and wage growth moderating, contributing to the Fed’s more measured stance. However, consumer spending remains relatively resilient, and inflation data continues to be watched closely.
Financial markets have been closely monitoring Fed signals for any indication of when the next rate cut might come, but Wednesday’s statement offered no clear guidance. Analysts say future decisions will likely hinge on inflation readings and employment reports in the coming months.
The next FOMC meeting is scheduled for June, when officials may reassess their position based on updated economic data.
