US Federal Reserve holds interest rates for third straight month

30/04/2026 05:05 AST

The US Federal Reserve on Wednesday decided to hold rates steady, as the central bank continues to monitor inflationary effects of the Iran conflict.

In a meeting of the Federal Open Markets Committee, the Fed left the federal funds rate steady at the 3.5%-3.75% target range for a third consecutive meeting, in line with expectations.

In its most divided decision since 1992, the Federal Reserve noted rising concerns about inflation in a policy statement that drew three dissents from officials who no longer feel the US central bank should communicate a bias towards lowering borrowing costs.

A fourth dissent at the meeting came in favor of a quarter-percentage-point rate cut.

"Inflation is elevated, in part reflecting the recent increase in global energy prices," the Fed said in its policy statement, a shift from previous language saying that inflation was just "somewhat" elevated." Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook."

The 8-4 vote was the most divisive since October 6, 1992, and shows the breadth of opinion incoming Fed Chair Kevin Warsh will face in pursuing rate cuts that US President Donald Trump says he expects from his chosen successor to Jerome Powell, whose term as central bank chief ends on May 15.

With global oil prices lodged above $100 a barrel due to the US-backed war against Iran, the Fed has been hard-pressed to determine if the impact is likely to be seen more through depressed growth or higher inflation, keeping the policy rate in the range where it has been since December despite repeated demands by Trump for looser monetary policy.

Alongside elevated inflation, "the unemployment rate has been little changed in recent months" while the economy continues to expand "at a solid pace," the Fed said.

Reuters