Federal Open Market Committee Meeting Key Takeaways 

Governors Stephen Miran and Christopher Waller dissented, favouring a 25-basis-point rate cut, while several other participants said they would consider easing if inflation trends lower in line with expectations. The decision itself was widely anticipated by markets, but the tone of the discussion remained cautiously hawkish.

Flexibility retained: Rate hikes still possible

Despite holding rates steady, policymakers deliberately kept policy optionality open. The minutes noted that several participants supported a “two-sided” guidance framework, meaning rate hikes remain possible if inflation stays above target.

The central bank continues to battle inflation toward its long-term 2% objective, and officials indicated upward adjustments to the target range could become appropriate if price pressures persist.

Inflation risks remain meaningful

A “vast majority” of officials assessed that downside risks to employment have moderated, but inflation continues to be the dominant concern. Policymakers warned that progress toward the 2% inflation target may be slower and more uneven than previously expected.

The committee emphasised that inflation running persistently above target remains a key risk shaping future decisions, explaining the reluctance to signal imminent rate cuts.

Labour market stabilising

The minutes also indicated improving labour conditions. Participants broadly agreed that the labour market has begun to stabilise and downside risks have diminished.

With appropriately calibrated monetary policy, officials expect employment conditions to remain stable and potentially improve over the course of the year, reinforcing the view that the economy can handle current interest rate levels.

Growth outlook steady, but AI adds uncertainty

Economic activity was described as expanding at a solid pace, with expectations of steady growth continuing into 2026. However, policymakers highlighted structural uncertainties, particularly the transformative impact of artificial intelligence.

Officials acknowledged AI’s significant productivity potential but also warned about unpredictability and risks associated with rapid technological disruption, adding a new layer of uncertainty to long-term economic forecasting.

What comes next: March 17-18 meeting

The next policy meeting is scheduled for March 17-18, when the committee will release updated economic projections and interest-rate guidance. With inflation still above target and growth stable, the path ahead remains divided between possible easing and further tightening depending on incoming data.