Fed Maintains Interest Rate

Summary

The Federal Reserve held its benchmark interest rate steady at 3.50%-3.75%, ending a series of three consecutive rate cuts from the latter half of 2025Huxiu. The decision, which was widely expected, was justified by an improved economic outlook, with the Fed noting robust economic activity and removing prior language about downside risks to the labor marketZhitong+ 3. The vote was 10-2, with two officials dissenting in favor of a rate cutFX678. Following the announcement, market expectations for any further rate adjustments have been pushed out to after June 2026Zhitong+ 2.

Impact Analysis

So they’re finally admitting the easing cycle is over for now. The hold itself was a givenQQ News, but the real signal is them dropping the language about labor market risksZhitong. That’s a hawkish pause. They’re telling us the economy is strong enough that it doesn’t need more helpZhitong, and they’re shifting to a truly neutral, data-dependent stance. The bar for another cut just got much higher.

This kills the narrative for a spring rate cut; the market is now correctly pushing expectations beyond JuneSina Finance. The two dissents show there’s still a dovish factionFX678, but the core is firmly on hold. Bottom line: the market has to reprice the front end of the curve. This is a headwind for long-duration growth assets that were banking on continued easing. I think it’s time to favor value and cyclicals that can perform without the tailwind of falling rates.