The Federal Open Market Committee voted 8-4 at its April 29 meeting to keep the federal-funds target range at 3.5 to 3.75 per cent, the third consecutive hold. The four dissents — split between officials seeking cuts and those wanting hikes — were the most for a single decision since October 1992.
Markets continue to digest the meeting through this week. Chair Jerome Powell, whose term as chair concludes on May 15, told reporters at the post-meeting press conference that he intends to remain on the board of governors after stepping down from the chairmanship. He said the Trump administration's legal challenges had "left me no choice but to stay" on as governor.
The committee's statement cited "a high level of uncertainty about the economic outlook", driven by Middle East developments and what it described as "elevated" inflation linked to global energy prices. The Summary of Economic Projections has not been updated since March.
A presidential nomination for the next chair has not yet been announced, although former Fed governor Kevin Warsh is widely seen as a leading contender. Confirmation hearings could stretch through the summer.
Many private-sector forecasters have pushed back the timing of the next rate cut to late 2026 or 2027, citing oil prices, sticky core services inflation and continued fiscal stimulus. Two-year Treasury yields trade near 4.0 per cent, broadly unchanged on the meeting.
Equities have shrugged off the more uncertain rate path, with the S&P 500 reaching a record on Wednesday on hopes of an Iran-related risk premium release.