Fed holds rates steady for first time since July

Officials signaled greater comfort with a pause on rate cuts. Two governors favored a cut.

- Nick Timiraos

The Fed has navigated between competing risks for months.

The Federal Reserve entered a new holding pattern on interest rates Wednesday and signaled little urgency to resume cuts after contentious reductions at officials’ three previous meetings.

The decision to hold the benchmark federal-funds rate steady in a range between 3.5% and 3.75% was approved on a 10-2 vote.

Fed Chair Jerome Powell said recent data had painted a somewhat brighter picture than officials had at their last meeting, with stronger economic growth and tentative signs of labor-market stabilization.

The comments suggest officials are comfortable staying put for some time—until new signs of labor-market weakness emerge or inflation convincingly makes progress toward the Fed's goal.

“We're not trying to articulate a test for when to next cut...What we're saying is we're well positioned,” Powell said at a news conference.

The decision, widely expected by investors, barely registered in markets. Major stock indexes were little changed, and the yield on the benchmark 10-year Treasury note edged up to 4.25% from 4.224% on Tuesday.

Without further labor market weakening, the next cut may not come until after Powell’s term as Fed chair ends in May. “They're likely on hold for awhile unless there's a big surprise,” said William English, a former senior Fed economist.