The Federal Reserve interest rate cuts were paused as the Federal Open Market Committee voted to keep the federal funds rate in a range of 3.5% to 3.75%, with ten members supporting the hold and two dissenting votes, according to the FOMC statement.
The committee halted a run of three successive quarter percentage point reductions, which reporting said occurred in September, October and December, and described incoming data as showing solid economic activity, with job gains low and some signs of stabilization in the unemployment rate.
Fed Chair Jerome Powell said the current stance of policy is appropriate to promote progress toward maximum employment and the 2% inflation goal, adding that inflation remains somewhat elevated and that policy may be loosely neutral, Powell said during the press conference.
The post-meeting statement removed language that had previously put higher weight on risks from a weakening labor market than on inflation, a change that officials said supports a near-term pause on further rate cuts while they assess incoming data and evolving risks.
Markets reacted to the decision: Treasury yields moved higher and the S&P 500 hovered near 7,000, as traders trimmed probability of imminent reductions and futures pricing showed at most two rate reductions in 2026 and none in 2027, as reported.
Political Pressure, Investigations, and Dissent
President Donald Trump has mounted sustained pressure on Powell to cut rates, including personal attacks and moves tied to the Justice Department, which has opened a criminal probe and subpoenaed Powell over Fed headquarters renovations, according to reporting.
Powell characterized the inquiry as a "pretext," warning that the threat of criminal charges risks directing monetary policy by political pressure rather than evidence and economic conditions, and he urged his successor to stay out of elected politics.
The decision to hold drew two dissents from Governors Stephen Miran and Christopher Waller, both appointees of President Trump, with Miran favoring deeper or earlier cuts and Waller advocating another quarter-point reduction, reporting said.
Powell acknowledged he would not answer multiple questions about the investigation and declined to comment on whether he will remain on the Fed's board after his chair term ends in May, while his board term is set to expire in 2028, as noted in the reporting.
Despite the external tensions, Fed officials said they remain committed to independence and credibility, and markets and analysts said the hold signals a wait-and-see stance, leaving a path open for cuts later depending on economic data and inflation readings.
