Central Bank Keeps Rates Steady
The US Federal Reserve decided to hold interest rates steady on Wednesday, pressing pause after cutting rates three times last year. The benchmark rate remains at around 3.6%, a move that reflects growing confidence in the strength of the economy.
In its statement, the Fed said the job market appears to have stabilised and described overall economic growth as “solid,” upgrading its earlier assessment of “modest” growth. With hiring holding up and no clear signs of slowdown, policymakers see little urgency to push borrowing costs lower right now.
Inflation Still the Sticking Point
While most Fed officials expect rates to come down later this year, many want clearer proof that inflation is easing toward the central bank’s 2% target. The Fed’s preferred inflation gauge stood at 2.8% in November, slightly higher than a year earlier, keeping pressure on policymakers to stay cautious.
Two governors, Stephen Miran and Christopher Waller, dissented from the decision, arguing for another quarter-point cut. Miran, appointed by President Donald Trump, has consistently pushed for more aggressive reductions. Waller, meanwhile, is being considered as a possible successor to Fed Chair Jerome Powell, whose term ends in May.
Political Pressure and a Divided Fed
The decision is likely to draw renewed criticism from President Trump, who has repeatedly attacked Powell for not cutting rates faster. The Fed is meeting under intense political scrutiny, with Powell recently confirming the central bank received subpoenas related to a Justice Department investigation into his congressional testimony over a costly building renovation.
When the Fed eventually lowers rates, it typically reduces borrowing costs for mortgages, car loans and business financing, although market forces also play a role. For now, the key question is how long the central bank will stay on hold. Officials remain split between those who want to wait for inflation to cool further and those who believe lower rates are needed to keep the job market strong.
