The Federal Reserve kept interest rates unchanged for the time being
The central bank is taking a temporary break as the economy proves resilient.
Federal Reserve Chairman Jerome Powell speaks during a press conference.
The Federal Reserve on Wednesday chose to leave interest rates unchanged, a widely expected decision as the central bank tries to balance its concerns about a slowing labor market and persistent inflation.
Two members of the Federal Open Market Committee, and two conservatives Christopher and Stephen Miran, expressed support for lowering interest rates.
The committee acknowledged in its statement that the economy is showing signs of improvement, stating: "Available indicators suggest that economic activity is expanding at a steady pace. However, job opportunities remain low, and the unemployment rate has shown some signs of stabilization." It also noted that "inflation remains relatively high."
This move comes amid mounting pressure on Federal Reserve Chairman Jerome Powell, a Justice Department investigation into renovations at the Fed headquarters, and President Donald Trump's imminent decision on Powell's successor. Powell's term as Fed chairman is set to expire in May, though he could remain in his post as central bank governor.
Powell disclosed the ongoing investigation into his testimony before Congress and affirmed the Federal Reserve's independence from any political interference. However, Trump continued to criticize Powell for his reluctance to cut interest rates more aggressively. Trump is expected to nominate a new chair soon.
In his press conference following any meeting, Powell refused to answer questions raised by the investigation, or his press conference on what happened in May.
He said consumer spending was resilient and business investment was strong, describing how the "upside risks" of inflation and the "downside risks" of the labor market had diminished.
With recent data showing the economy ending 2025 on a strong note, and inflation nearing 3% annually, exceeding the Federal Reserve's 2% target, analysts believe further interest rate cuts before the summer are unlikely. Markets still anticipate one or two cuts this year.
It is worth noting that the Federal Reserve statement softened the central bank's remarks on the labor market, removing a sentence from its previous statement in November that referred to "downside risks" to the labor market.
