The Federal Reserve left its benchmark interest rate unchanged on Wednesday after three consecutive cuts, electing to pause its rate moves as officials keep watch over inflation and hiring trends. Since the Fed’s previous meeting in December, U.S. economic indicators have shown a “clear improvement in the outlook for growth,” Chair Jay Powell said during a press conference. Upside risks to inflation and downside risks to employment have both diminished, and “the economy has once again surprised us with its strength,” Powell added.

The central bank could remain on pause through the remainder of Powell’s term as chair. Market participants don’t anticipate another rate cut until at least June, based on the CME Group’s FedWatch Tool. Some officials may argue that interest rates should be cut to bolster labor demand, while productivity gains driven by AI and automation could help keep a lid on inflation. On the other side of the debate, officials still may consider inflation risks too high to warrant further easing, particularly if growth accelerates or new tariffs come into play. The Fed’s latest rate decision came amid notable moves in the dollar, precious metals and U.S. stocks this week. The S&P 500 eclipsed the 7,000-point threshold for the first time during Wednesday trading, as investors parse the economic outlook and corporate earnings reports.

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