Here are the five key takeaways from Wednesday's Fed rate decision

• Two Fed officials dissented in favor of another quarter-point cut: Governors Stephen Miran and Christopher Waller, with Miran shifting from previous half-point cut preferences
• Powell deflected political questions five times, advising his successor to 'stay out of elected politics' amid ongoing controversies surrounding the Fed
• Analysts view the decision as hawkish despite the rate hold, with the Fed raising the bar for further cuts and policy rates seen as closer to neutral given current economic conditions

Federal Reserve Holds Rates Steady, Signals Extended Pause

Key Decision:

The Federal Reserve held interest rates steady at 3.5%-3.75% on Wednesday, ending a three-consecutive-meeting cutting cycle. The decision met market expectations with no major surprises from Chair Jerome Powell's press conference.

Notable Dissents:

Two FOMC members—Governors Stephen Miran and Christopher Waller—dissented in favor of an additional 0.25 percentage point cut. Miran's position represented a shift from previous dissents favoring larger 0.5-point reductions.

Powell's Stance:

Chair Powell deflected political questions throughout the press conference, responding "I have nothing for you on that" five times. When asked about advice for his successor, he emphasized staying "out of elected politics."

Economic Outlook:

The FOMC statement projected solid economic growth ahead, acknowledging near-term inflationary pressures from tariffs that are expected to eventually subside. The labor market remains stable with flat labor force participation, reduced immigration keeping hiring modest, and muted layoffs.

Market Reaction:

Markets showed minimal reaction to the announcement. Traders are pricing in approximately 60% probability of two additional quarter-point cuts in 2026.

Expert Analysis:

Morgan Stanley's Ellen Zentner characterized the hold as "somewhat hawkish," noting Powell has "raised the bar for further action." Allianz's Charlie Ripley suggested policy rates are approaching neutral levels, signaling "time for a long pause." Navy Federal's Heather Long anticipates leadership changes when a new Fed Chair assumes the role in May.

Implications:

The Fed's cautious approach suggests rates will remain elevated longer, prioritizing inflation control while monitoring employment data closely before resuming cuts.