The Federal Reserve announced a pause after three interest‑rate cuts, keeping the federal funds target range at 3.50 %-3.75 % as of Wednesday.
The decision was not unanimous. President Jerome Powell and most members of the FOMC voted for the pause, while Stephen Miran-who had urged a quicker pace of cuts in the last two meetings-remained in favor of cutting sooner. Christopher Waller joined Miran’s position this time.
In a joint statement the Fed said recent indicators show the economy expanding at a solid pace. Employment growth is still low, and the unemployment rate appears to be stabilizing, but inflation remains somewhat elevated.
The Fed also reiterated that it is ready to adjust monetary policy if “risks arise that could impede the achievement of the Committee’s goals”. It will weigh a wide array of information, including labor‑market conditions, inflation pressures, inflation expectations, as well as financial and international developments.
Central bankers typically view higher rates as a tool to reduce overall inflation, though such rates can hurt stock markets and discourage economic investment. Conversely, rates that are too low risk reigniting inflation.