The Federal Reserve left its benchmark interest rate unchanged at three and a half to three and three‑quarter percent following its first policy meeting of 2026, reflecting confidence in the US economy despite inflation remaining above the central bank’s two percent target.

Chair Jerome Powell said policymakers were in “no rush” to lower borrowing costs further, adding that future decisions would be guided by incoming economic data rather than preset expectations. The decision follows three consecutive quarter‑point reductions in 2025 and signals a pause in the Fed’s monetary easing cycle.

Two members of the Federal Open Market Committee dissented, favouring an immediate rate cut, highlighting differing views on how quickly the central bank should respond to persistent price pressures.

Recent economic indicators showed robust growth and a stabilising labour market, while inflation remains elevated. Powell noted steady consumer spending and overall activity, suggesting the current policy stance balances support for growth with efforts to contain price pressures.

Markets reacted moderately, with investors adjusting expectations for the timing of any future rate cuts, which are now seen as likely to occur later in the year if inflation trends moderate. The meeting also occurred amid scrutiny of the Fed’s independence, with Powell emphasising the need for decisions to remain free from political influence.