Fed Holds Rates at 3.5%–3.75% as Powell Stresses Policy Flexibility

The Federal Reserve previously raised interest rates rapidly to curb inflation before shifting its focus to balancing prices, employment and economic growth. The benchmark rate remains at 3.5%–3.75%, with implications for the U.S. dollar, Treasury yields and global funding costs. Chair Jerome Powell’s approaching departure has also intensified scrutiny of the Fed’s independence and internal divisions.

The Fed held rates steady at its 2026 Federal Open Market Committee meeting, in line with market expectations. At his post-meeting news conference, Powell said policy was not on a preset path and would remain flexible in response to economic data and risks including developments in the Middle East. The Fed also raised its forecast for U.S. gross domestic product growth in 2026 to 2.4%.