The Federal Reserve held interest rates steady Wednesday as it seeks to curb stubborn inflation.
Fed policymakers have hinted that they'll be cautious about additional rate cuts, so long as the job market remains solid and prices continue to climb.
"We feel like we don't need to be in a hurry to make any adjustments," Fed chairman Jerome Powell told reporters Wednesday.
Members of the Fed's rate-setting committee voted unanimously to leave their benchmark interest rate between 4.25% and 4.5%. That helps determine the cost of other short-term borrowing, such as car loans and credit card debt.
While the decision to leave rates unchanged was widely expected, it sets up a potential clash with President Trump, who told reporters earlier this month that he believes "interest rates are far too high."
In a speech to the World Economic Forum last week, Trump also said he would "demand" lower rates.
Powell said he and his colleagues would not be swayed by Trump's demands, but he declined to engage in a war of words with the president.
"I'm not going to have any response or comment whatsoever on what the president said," Powell said. "The public should be confident that we will continue to do our work as we always have."
No rush to cut rates further
The central bank has already cut its benchmark rate by a full percentage point since September. But faced with sticky inflation, policymakers are in no hurry to make additional cuts. Consumer prices in December were up 2.9% from a year ago — a slightly larger annual increase than the previous month.
Meanwhile, the job market has proven to be remarkably resilient, with employers adding more than a quarter-million jobs last month. If the labor market were weaker, there would be more pressure on the Fed to cut borrowing costs and stimulate hiring.
"I have seen nothing in the data or forecasts that suggests the labor market will dramatically weaken over coming months," Fed governor Chris Waller said this month.
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At their last meeting in December, Fed policymakers projected they would cut interest rates by an average of just half-a-percentage point this year — which was down from the full-point cut they were predicting three months earlier.
There was considerable disagreement within the rate-setting committee, however, with one member projecting no rate cuts in 2025 and others predicting as many as four or five quarter-point reductions.
Uncertainty over Trump's policies
While Trump wants the Fed to lower interest rates, his own policies could work against that by fueling inflation. The president has threatened widespread tariffs, for example, which could lead to higher prices for consumers. Mass deportations could also limit the workforce, making it harder to bring prices under control.
Still, Powell said it's premature to assess the impact of those or other policies from the new administration.
"We don't know what will happen with tariffs, with immigration, with fiscal policy and with regulatory policy," Powell said. "We're going to be watching carefully as we always do."
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