Fed Maintains Interest Rate

Summary

The U.S. Federal Reserve announced it will maintain the federal funds rate target range at 3.5%-3.75%, pausing after three consecutive rate cuts in late 2025.Zhitong+ 2 This decision was widely expected by the market.QQ News+ 2 The accompanying statement reflected an improved economic outlook, noting robust expansion and a stabilizing labor market, and notably removed language about downside risks to employment.Zhitong+ 3 As a result, market expectations for another rate cut have been pushed back, with many now anticipating no further adjustments before June.Zhitong+ 3 The decision passed with a 10-2 vote, indicating some internal dissent.FX678

Impact Analysis

So the hold was priced in, but the language is the real story. They’re basically telling the market to shelve its hopes for near-term cuts. By removing the language about downside risks to the labor market and upgrading their economic assessment, the Fed is signaling the easing cycle from last year is over.Zhitong+ 2 This isn’t a dovish pause; it’s a hawkish one. They’re shifting to a genuinely neutral, data-dependent stance and seem comfortable waiting for months.Huxiu The market is still pricing a decent chance of a cut before June, and that now looks like the wrong trade.Zhitong+ 2 This recalibration should put a ceiling on duration-sensitive equities and support the dollar. The message is clear: ‘higher for longer’ is back on the table until the data decisively turns.