WASHINGTON — The Federal Reserve held interest rates steady on Wednesday, but in its most divided decision since 1992 noted rising concerns about inflation in a policy statement that drew three dissents from officials who no longer feel the U.S. central bank should communicate a bias toward lowering borrowing costs.
A fourth dissent at the meeting came in favor of a quarter-percentage-point rate cut.
"Inflation is elevated, in part reflecting the recent increase in global energy prices," the Fed said in its policy statement, a shift from previous language saying inflation was just "somewhat" elevated.
"Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook," it said.
The Federal Reserve building undergoes construction April 16 in Washington, D.C.
The 8-4 vote was the most divisive since Oct. 6, 1992, and shows the breadth of opinion presumed incoming Fed chairman will face in pursuing rate cuts that President Donald Trump says he expects from his chosen successor to Jerome Powell, whose term as central bank chief ends on May 15.
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Though the latest policy statement retained language about how the Fed would assess the "extent and timing of additional adjustments" to rates, a phrase that pointed to future cuts as the next likely move, three policymakers objected.
Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan, while supportive of holding the policy rate steady in the current 3.50% to 3.75% range, "did not support inclusion of an easing bias in the statement at this time" and voted against the new statement.
In a news conference after the Fed meeting, Powell said, "we are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook and the balance of risks." He added, "monetary policy is not on a preset course, and we will make our decisions on a meeting-by-meeting basis."
He also said he will stay on as a member of the central bank's Board of Governors when his leadership term ends next month.
“After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor,” he said at the news conference.
U.S. Federal Reserve Chair Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee (FOMC), at the U.S. Federal Reserve in Washington, D.C., U.S., April 29, 2026. REUTERS/Kevin Lamarque
With global oil prices lodged above $100 a barrel due to the U.S.-backed war against Iran, the Fed is hard-pressed to determine if the impact is likely to be seen more through depressed growth or higher inflation, keeping the policy rate in the range where it has been since December despite repeated demands by Trump for looser monetary policy.
Alongside elevated inflation, "the unemployment rate has been little changed in recent months" while the economy continues to expand "at a solid pace," the Fed said.
Stocks on Wall Street remained in negative territory after the release of the statement. U.S. Treasury yields rose. Futures markets were pricing in little chance of a Fed rate cut by the end of this year.
Omair Sharif, president of forecasting firm Inflation Insights, said in a note to clients that the fractious policy vote made some level of sense. "The new statement upgraded the concern on inflation," he said, adding that it is "not surprising" some officials didn't agree with the move to retain an easing bias given price pressure worries.
Kevin Warsh, U.S. President Donald Trump's nominee to be next chair of the Federal Reserve, stands at the end of an April 21 Senate Banking Committee confirmation hearing on Capitol Hill in Washington, D.C.
Fed leadership transition
The new statement is likely the last to be issued under Powell's leadership.
Earlier in the day, the Republican-controlled Senate Banking Committee voted to advance Trump nominee Kevin Warsh's nomination on a party-line 13-11 vote. The Senate is expected to confirm Warsh next month.
The minutes of the Fed's March 17-18 meeting noted a growing number of policymakers were open to the idea that the central bank's next move might be a rate increase, and the number of hawkish dissents may prompt investors to boost bets that borrowing costs will rise this year.
Since the March meeting, inflation showed signs of rising, with officials concerned that sustained high global oil prices could evolve from a one-time price shock to a jump in underlying pressure on prices.
Fed Governor Stephen Miran, in what may also be his last meeting, again dissented in favor of a rate cut, having dissented in favor of easier policy at every meeting since moving to the central bank from his prior job as one of Trump's top economic advisers.
