The Federal Reserve said Wednesday that it is leaving its benchmark interest rate unchanged, marking the central bank’s first pause after three consecutive rate cuts last year.
The Fed maintained its federal funds rate — what banks charge each other for short-term loans — in its current range of 3.5% to 3.75%. The decision matched expectations from Wall Street economists, according to financial data service FactSet.
The central bank is grappling with two potentially troubling economic trends: A softer labor market and an inflation rate that remains well above the central bank’s annual target of 2%. At the same time, the U.S. economy continues to expand at a fast pace, with the country’s third-quarter growth rising at a 4.4% annual rate, far outpacing economist forecasts.
“What is clear is that, given the current strength of the U.S. economy — with 3Q 2025 growth nearly twice its trend pace — there is no urgency to lower rates aggressively,” said Seema Shah, chief global strategist at Principal Asset Management, in an email ahead of the Fed’s announcement on Wednesday.
Today’s decision comes amid weeks of turmoil involving the Fed, including a Department of Justice investigation into Fed Chair Jerome Powell, a probe that Powell said is a pretext for weakening the Fed’s independence. The Supreme Court is also currently weighing whether to allow Fed Governor Lisa Cook to keep her job after Mr. Trump sought to fire her.
—This is breaking news and will be updated.
