A divided Fed holds steady, signals patience and pushes rate cuts further out
Hold as expected, dissent contained: In a 10–2 vote, the Fed kept the policy rate unchanged at 3.50%–3.75%, as expected. Governors Waller and Miran dissented in favour of a 25 bps cut, highlighting growing unease about the labour market even as the committee chose to pause.
Fed speak: a subtle shift in emphasis. The statement removed references to rising downside risks to employment and described growth as “solid”, signalling firmer confidence in the outlook. At the same time, Powell flagged lingering data distortions, noting that recent job gains may have been overstated. This points to a labour market that is cooling but not deteriorating. The combination suggests the Fed sees less urgency to ease, as risks around growth and employment have moderated while inflation progress remains intact.
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