WASHINGTON – The Federal Reserve on Wednesday voted to hold its key interest rate steady as policymakers navigate their way through higher-than-expected inflation readings, mixed signs on the labor market – and a war.In a widely expected decision, the Federal Open Market Committee voted 11-1 to keep the benchmark federal funds rate anchored in a range between 3.5%-3.75%. The rate sets overnight funding costs for banks but influences a broad range of consumer and business borrowing.The committee in its post-meeting statement made few changes to its view on the economy, with a slightly faster pace of growth and higher inflation projections for 2026.Despite the elevated uncertainty, officials again signaled they still expect a few rate cuts ahead. The closely watched “dot plot,” which reflects individual members’ rate projections, pointed to one reduction this year and another in 2027, though the timing remains unclear.[embedded content]Of the 19 FOMC participants, seven signaled they expected rates to stay unchanged this year, one more than the last update in December. While future years showed a fairly wide disbursement of forecasts, the median outlook is for an additional cut in 2027 before the funds rate steadies out around 3.1% for the long term.War’s implications are ‘uncertain’The statement did note the uncertainty associated over the war with Iran that started nearly three weeks ago. The fighting and its impact on the Strait of Hormuz has roiled the global oil market and threatened to keep inflation above the Fed’s 2% target.”The implications of developments in the Middle East for the U.S. economy are uncertain,” the statement said.During his news conference, Federal Reserve Chair Jerome Powell elaborated, saying it was “too soon to know” the impact of the war. “Near term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East,” he saidGovernor Stephen Miran again dissented, favoring a quarter percentage point cut amid rising concerns about the jobs …
