Fed Holds Interest Rates Steady for Third Straight Meeting

Borrowing costs stayed stuck in place for households and small businesses as the Federal Reserve held its benchmark rate steady for a third straight meeting, keeping the federal funds target range at 3.5% to 3.75%. For families carrying variable-rate debt, for borrowers shopping for mortgages, and for owners trying to finance inventory or payroll, the decision meant little relief from still-elevated financing costs.

The Federal Open Market Committee said the economy had continued to expand at a solid pace, with job gains low on average and unemployment little changed in recent months. Inflation remained elevated, the Fed said, in part because of the recent rise in global energy prices. The Board of Governors also unanimously kept the interest rate paid on reserve balances at 3.65%, while leaving the standing overnight reverse repo rate at 3.5% and the standing overnight repo rate at 3.75%.

Markets had already priced in the outcome. CME FedWatch showed a 100% probability of a hold heading into the meeting, underscoring how little room officials saw for an immediate cut. Still, the vote exposed a central bank more divided than it has been in decades. The April 2026 decision split 8-4, the most dissenting votes since October 1992. Stephen Miran voted for a quarter-point cut, while three officials objected to language that suggested future rate cuts could be on the table.

The statement offered the same message of caution that has defined the Fed’s recent posture: officials will keep watching incoming data and stand ready to adjust policy if risks threaten the central bank’s goals. That leaves the next inflation and labor reports at the center of the policy debate. Fed officials have been trying to balance persistent price pressure against a softer job market, and their March 2026 economic projections already pointed to just one additional cut this year, alongside higher inflation expectations.

The political backdrop was no quieter. President Donald Trump has repeatedly pressed Jerome Powell to cut rates more aggressively, adding pressure to a central bank already navigating a difficult mix of stubborn inflation and weakening labor conditions. Powell’s term as chair is set to end on May 15, 2026, though his term as a governor runs until January 2028. The April meeting may have been his last as chair, giving the hold added weight as the Fed heads into another stretch where every inflation reading and jobs report could reshape the path to cuts.