US Federal Reserve Keeps Rates Unchanged
The US Federal Reserve has kept its benchmark interest rate unchanged as policymakers continue to confront inflation above the central bank’s 2 percent target. The federal funds rate remains within a range of 3.5 percent to 3.75 percent.
Federal Reserve Holds Rates Unchanged
The Federal Open Market Committee approved the decision by a 9-3 vote after its two-day policy meeting. The benchmark rate has remained at its current level since the beginning of 2026.
The central bank said economic activity continued to expand at a solid pace despite elevated uncertainty partly caused by the conflict in the Middle East. Productivity and capital investment remained strong, while employment growth broadly kept pace with workforce growth.
The unemployment rate has also changed little.
Elevated Inflation Delays Rate Change
Federal Reserve officials said inflation remained elevated compared with their long-term target. Supply disruptions have contributed to price increases in several sectors, particularly energy.
The Personal Consumption Expenditures price index increased 4.1 percent during the 12 months ending in May. Core inflation, which excludes food and energy prices, stood at 3.4 percent.
The Federal Reserve said it remained committed to restoring price stability while supporting maximum employment. Future decisions will depend on inflation data, labour market conditions and risks affecting the wider economy.
Three Officials Supported Rate Increase
The policy decision revealed disagreement within the committee. Beth Hammack, Neel Kashkari and Lorie Logan voted against holding rates steady.
All three officials preferred raising the federal funds rate by 25 basis points, which would have moved the target range to 3.75 percent to 4 percent.
Their dissent reflected concerns that continuing inflationary pressure, including higher energy prices, could require tighter monetary policy.
The Federal Reserve did not commit to a timeline for its next rate adjustment. Its next policy decision will depend on incoming economic data and changes in the inflation outlook.
