The US Federal Reserve has maintained its key interest rate for the second consecutive time. The Federal Open Market Committee decided to hold its key interest rate at 3.5%-3.75% in March, according to a statement on Wednesday.
Jerome Powell and ten other members voted for maintaining the interest rate, while voting against the action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/4 percentage point. The Fed in its median 2026 GDP projection to 2.4% from 2.3%.
In addition, the dot plot indicates that Fed is expected to lower rates by a quarter-point in 2026 and another quarter-point in 2027, the same as they projected in December
A Bloomberg poll of economists forecasted that the Fed would keep rates steady.
"The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. Uncertainty about the economic outlook remains elevated," the Fed said in its statement on Wednesday. The Committee added that it is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
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At its last meeting, the Federal Reserve kept its policy interest rate steady in the 3.50%–3.75% range. Before that, it had delivered three consecutive rate cuts of 0.25% each to prevent a softening labour market from slipping into higher unemployment.
This comes amid data pointing to little change in the US economic outlook. Even so, the recent data now seems outdated after Strait of Hormuz tensions escalated and President Donald Trump has not outlined clear objectives or timeline to end the war.
Additionally, the Fed is also preparing for leadership change as the current head, Jerome Powell's, term ends in May. He will be replaced by Kevin Warsh, nominated by Trump. Trump has been pushing for larger rate cuts by the Fed, arguing that it is needed to stimulate the economy. Wall Street traders have increased bets that the Federal Reserve may start cutting rates in June, which could be the first to be led by Warsh, if he is confirmed by the US Senate in time.
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