Fed Keeps Rates Unchanged

Economy State of the Union: A divided Federal Reserve voted Wednesday to hold interest rates constant, despite concerns about inflation. Photo by Brendan SMIALOWSKI / AFP via Getty Images The Federal Reserve decided in a 9-3 vote Wednesday to keep interest rates steady, holding to the 3.5 to 3.75 percent range that has been in place since January. “Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the Fed said in its announcement, which also cited strong “productivity growth and capital investment” trends and a stable unemployment rate. Subscribe Today Get daily emails in your inbox Three Fed members dissented from the decision, voting instead to raise rates by a quarter point. The division reflects increasing concern about inflation, which—exacerbated by energy shocks from the Iran War—has remained well above the central bank’s target of 2 percent. Wednesday’s rate-setting meeting was the second since Kevin Warsh became Chairman in May. Warsh is believed by many to be in a difficult position: although rate increases are a typical response to persistent inflation, President Trump has made clear his opposition to further hikes. Beyond the situation in the Middle East, other developments the Fed is reportedly keeping an eye on include AI investments, tariff decisions, and immigration policy. The next meeting is slated for September.