Fed policymakers voted to leave the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75%. The move follows the central bank’s decision to hold rates steady in January after three successive 25-basis-point rate cuts in September, October and December to close out last year.
The Federal Open Market Committee (FOMC) voted 11-1 in favor of leaving rates unchanged, with the lone dissent by Fed Governor Stephen Miran, who was in favor of a 25 basis point cut.
The FOMC’s statement noted that economic indicators suggest the economy is expanding at a solid pace, with low levels of job gains and somewhat elevated inflation.
It also noted that uncertainty surrounding the economic outlook “remains elevated” and that the “implications of developments in the Middle East for the U.S. economy are uncertain.”
Federal Reserve Chairman Jerome Powell said at a news conference announcing the decision that the slowdown in hiring reflects lower demand for labor and a decline in immigration. He added that inflation readings remain elevated in the goods sector due to the effects of tariffs raising consumer prices.
Powell said the current 3.5% to 3.75% range for the benchmark federal funds rate is within a range of neutral. He added that it’s too soon to tell what the effect of the conflict in the Middle East will be on the economy, adding that policymakers will continue to monitor economic data as they consider adjusting monetary policy.