Fed Holds Rates at 3.5% to 3.75%, With Two Governors Dissenting

The Federal Reserve left its benchmark interest rate in a range of 3.5 percent to 3.75 percent on Wednesday, ending a run of three straight quarter-point cuts, according to CBS News and CNBC. The decision matched what Wall Street economists expected, CBS reported, citing FactSet.

The vote was 10-2. Governors Stephen Miran and Christopher Waller dissented, preferring a quarter-point cut, both outlets reported. CNBC reported that both were appointed by President Trump and that it was Miran’s fourth straight dissent.

The Fed’s statement said economic activity “has been expanding at a solid pace” and that “inflation remains somewhat elevated,” according to CNBC. CNBC also reported that the statement described job gains as low and said the unemployment rate showed “some signs of stabilization.” It dropped an earlier clause saying the risk from a weakening job market outweighed the risk from higher inflation, which CNBC read as a sign the Fed sees its two goals as more balanced.

At his news conference, Powell cited “a clear improvement in the outlook for growth” since the last meeting, according to both outlets, and told reporters, “a stronger forecast, really,” CNBC reported. CBS reported that he said the Fed sees itself as well positioned after the three cuts in 2025 and will let the data guide it. Third-quarter economic growth ran at a 4.4 percent annual rate, both outlets reported. CBS reported that consumer prices rose at a 2.7 percent annual pace in December; CNBC described inflation as still near 3 percent, above the Fed’s 2 percent goal.

The meeting took place under political pressure. Trump has pressed the Fed to lower rates and said he will soon name Powell’s successor; Powell’s term as chair ends in May, both outlets reported. The Justice Department subpoenaed Powell over the renovation of the Fed’s Washington headquarters, and CNBC reported that Powell confirmed the probe and linked it to the effort to influence monetary policy. Powell sidestepped questions on the probe and on whether he would stay on the board, CBS reported.

The Supreme Court is weighing whether Trump can remove Fed Governor Lisa Cook. Powell, who attended the court’s arguments, called it “perhaps the most important” legal case in the Fed’s 113-year history, both outlets reported.

Analysts quoted by CBS and CNBC expected a long pause. Kay Haigh of Goldman Sachs Asset Management told CBS the Fed is “likely on an extended pause,” and CNBC reported that futures markets priced in at most two cuts in 2026. Treasury yields rose after the decision and the S&P 500 hovered near 7,000, CNBC reported. CNBC noted that prediction markets pointed to BlackRock bond chief Rick Rieder as the likely successor.