The Federal Open Market Committee voted 8-4 on Wednesday to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, marking the third consecutive meeting with no change. This decision follows the holds in January and March 2026.

Recent indicators point to economic activity expanding at a solid pace, though job gains have remained low on average and the unemployment rate has stayed little changed. March nonfarm payrolls increased by 178,000, with unemployment dipping to 4.3 percent. Inflation remains elevated, partly due to recent surges in global energy prices amid Middle East tensions.

The statement highlighted high uncertainty from developments in the region, with the Committee attentive to risks to both employment and price stability. It retained language suggesting the next policy adjustment would likely be a reduction, though officials stand ready to respond to new data.

Four officials dissented, the most since 1992. Stephen I. Miran preferred a 1/4 percentage point cut, while Beth M. Hammack, Neel Kashkari, and Lorie K. Logan opposed the statement's easing tilt.

In his post-meeting press conference, Chair Jerome Powell described the policy rate as in a "good place" and the labor market as "probably cooling off a little bit." He announced plans to remain on the Federal Reserve Board of Governors beyond his May 15 chair term expiration, citing a Justice Department investigation into cost overruns on Fed building renovations that threatens institutional independence.

Powell congratulated Kevin Warsh, President Donald Trump's nominee to succeed him, after the Senate Banking Committee advanced the nomination along party lines. Full Senate confirmation is expected soon.

Markets reacted with stocks paring earlier losses while Treasury yields rose and crude oil futures climbed 7 percent. Traders now price in an 11 percent chance of a rate hike this year, up sharply, with no cuts anticipated through 2027. The March dot plot had projected one cut in 2026 and another in 2027.

The Federal Reserve directed open market operations to sustain the rate range, maintaining the interest rate on reserve balances at 3.65 percent effective April 30. Officials will continue monitoring labor conditions, inflation pressures, and global developments.