The Federal Reserve, as was widely expected, has hit pause on interest rate cuts despite pressure from the Trump administration. After cutting its key rate at three consecutive meetings, the central bank held the rate at 3.5-3.75% Wednesday, CNN reports. "Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization," the Fed said in a statement. "Inflation remains somewhat elevated." The Fed said two governors, Trump appointees Stephen Miran and Christopher Waller, voted to cut rates.
Analysts say that with inflation still above its 2% target, the Fed is waiting to see how earlier cuts affect the economy. "Overall, the Fed just wants to stand pat. They feel they've got time to wait and see," former Fed Vice Chair Roger Ferguson told CNBC earlier this week. "This feels like a wait-and-see meeting, and we should all be listening to see if there's any hint or a bias towards a future action."
Most economists expect two rate cuts this year, with the first one not coming until June or later, the AP reports. Fed chair Jerome Powell's term expires in May, and President Trump is expected to announce a replacement as soon as this week. After the Justice Department opened a criminal probe of Powell earlier this month, the Fed chief said it was part of the president's push for aggressive interest rate cuts. Economists say the pressure campaign may have backfired, with Senate Republicans expressing support for Powell. "The last couple of weeks have been pretty positive for Fed independence," says Patricia Zobel, a former official at the New York Fed.
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