Federal Reserve issues FOMC statement

The Federal Open Market Committee voted unanimously Wednesday to hold the federal funds rate steady at 3-1/2 to 3-3/4 percent, extending the central bank's wait-and-see posture as inflation persists above its 2 percent target. [1] The 12-0 decision keeps the benchmark overnight lending rate at its current level, which the committee said supports the Federal Reserve's dual mandate of maximum employment and stable prices. [1] The FOMC reaffirmed its policy of maintaining ample reserves in the banking system. [1] The federal funds rate is the interest rate at which depository institutions lend reserve balances to each other overnight on an uncollateralized basis. [2] The Federal Reserve adjusts its administratively set interest rates, principally the interest on reserve balances, to bring the effective rate into the target range. [2] The target range is chosen to influence market interest rates broadly and, through the monetary transmission mechanism, the level of activity, employment, and inflation in the U.S. economy. [2] In its statement, the committee described economic activity as expanding at a solid pace, though it noted elevated uncertainty tied in part to the conflict in the Middle East. [1] Productivity growth and capital investment were characterized as strong, while job gains have kept pace with the workforce and the unemployment rate has changed little. [1] Inflation remains elevated relative to the committee's 2 percent goal, reflecting in part supply shocks that have driven price increases in certain sectors including energy. [1] The FOMC, which is the principal organ of U.S. national monetary policy, sets monetary policy by specifying the short-term objective for the Fed's open market operations. [4] The committee normally meets eight times a year, roughly seven weeks apart, though it can hold additional meetings and implement target rate changes outside its normal schedule. [2] The Federal Reserve System was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the monetary system. [10] Congress established three key objectives for monetary policy: maximizing employment, stabilizing prices, and moderating long-term interest rates. [10] The FOMC consists of all seven members of the board of governors and the twelve regional Federal Reserve Bank presidents, though only five bank presidents vote at a time. [10] The chair of the Federal Reserve is currently Kevin Warsh, who was sworn in on May 22, 2026, after being confirmed by the narrowest margin in history. [7] His predecessor, Jerome Powell, was the subject of a federal criminal investigation opened in November 2025 concerning the renovation of the Federal Reserve's headquarters and whether Powell made false or misleading statements to Congress. [9] The Department of Justice dropped that investigation on April 24, 2026. [9]