Fed Holds Rates Steady for a Third Straight Meeting
Policymakers cited resilient employment data and sticky services inflation as reasons to keep borrowing costs unchanged, disappointing traders who had priced in an earlier cut.
Elena Voss
Senior Markets Correspondent
The Federal Reserve's Eccles Building in Washington.
The Federal Reserve left its benchmark interest rate unchanged on Wednesday, extending a holding pattern that has now stretched across three consecutive meetings. The decision was widely expected by economists but still drew a mildly negative reaction from equity markets, which had been pricing in modest odds of an earlier move.
In the post-meeting statement, the committee pointed to a labour market that has proven more resilient than forecast, alongside services inflation that has cooled only gradually. Housing and healthcare costs in particular have been slower to come down than the goods side of the economy, where price growth has largely normalised.
During the press conference, the chair reiterated that policy would remain 'data dependent' and declined to commit to a specific timeline for the first cut. That language was largely unchanged from the prior meeting, which traders read as a signal that the committee is comfortable holding for longer rather than risk cutting prematurely.
Bond yields ticked higher following the announcement, with the policy-sensitive two-year Treasury yield rising as traders trimmed bets on near-term easing. Futures pricing now implies the first cut is more likely to land in the final quarter of the year, a shift of roughly six weeks from expectations heading into the meeting.
Analysts remain split on the path ahead. Some argue the committee is right to wait for clearer confirmation that inflation is durably returning to target, while others warn that holding too long risks unnecessary damage to a labour market that is already showing early signs of softening at the margins.