The Federal Reserve on Wednesday voted to take a break from a recent run of interest rate cuts, as the central bank navigates questions about its independence and awaits a new leader.Meeting market expectations, the central bank’s Federal Open Market Committee voted to keep its key interest rate in a range between 3.5%-3.75%. The decision put a halt to three consecutive quarter percentage point reductions, billed as maintenance moves to guard against potential downturns in the labor market.In voting to hold the line, the committee raised its assessment of economic growth. It also eased its concerns about the labor market as compared with inflation.”Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the post-meeting statement said. “Inflation remains somewhat elevated.” [embedded content]Importantly, the statement also erased a clause indicating that the committee saw a higher risk from the threat of a weakening labor market than that of heightened inflation. That would argue for a pause on rate cuts at least in the near term as officials see the Fed’s dual goals of low inflation and full employment more in balance.There was little in the way of guidance about what’s coming next, with markets expecting the Fed to wait until at least June before adjusting its benchmark rate again.”In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the statement said, repeating language inserted in December that markets saw as a shift away from the easing cycle that began in September 2025.Treasury yields moved higher following the decision, while the S&P 500 hovered just 7,000. Miran, Waller dissent As has been the case for recent meetings, there were dissents.Governors Stephen Miran and …
