The Federal Reserve has extended its pause on interest rate cuts. The central bank said Wednesday that it is keeping its key rate unchanged at around 3.6% for the second straight meeting, the AP reports. It projected just one rate cut for this year, with the Iran war expected to worsen inflation. "Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months," the Fed said in a news release. "Inflation remains somewhat elevated." The Fed added: "Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the US economy are uncertain."
This was the penultimate meeting with Jerome Powell as Fed chair, and while the central bank was widely expected to hold the key rate steady, analysts had expected up to three Fed governors to dissent, the most in decades, the Wall Street Journal reports. The only dissent Wednesday, however, came from Stephen Miran, one of Trump's three appointees, who favored a quarter-point rate cut.
Other central banks have also paused, or reversed, rate cuts this week. The Bank of Canada held its key interest rate steady at 2.25% on Wednesday, saying that while inflation has been close to its 2% target for a year, "the war in Iran is causing oil prices to move sharply higher and this will push up inflation in the short term," the CBC reports. On Tuesday, Australia's central bank, the Reserve Bank, raised its key rate to 4.1%, bringing it back to where it was before two rate cuts last year, the Guardian reports.
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