The US Federal Reserve has kept interest rates on hold, as US rate-setters signalled they are in no rush to cut despite Donald Trump’s relentless campaign to drastically lower borrowing costs.

The rate-setting Federal Open Market Committee said on Wednesday that economic activity was “expanding at a solid pace” and unemployment was showing “some signs of stabilisation” — hints that officials believe rates are now at an acceptable level for the world’s largest economy.

The move to keep the benchmark federal funds rate within a 3.5 to 3.75 per cent range follows three quarter-point cuts in a row as the labour market showed signs of weakening.

Fed governor Christopher Waller — one of four candidates left in the race to replace Jerome Powell as chairman later this year — dissented, joining fellow governor and Trump ally, Stephen Miran, in backing a quarter-point cut.

Mr Powell said on Wednesday that “if you look at the incoming data since the last meeting, [there is a] clear improvement in the outlook for growth . . . everything comes in suggesting that this year starts off on a solid footing for rates.”

He added that inflation had performed “about as expected” and there was labour market data suggested “evidence of stabilisation”.

Mr Trump has said he wants rates as low as 1 per cent — a level the president claims would lower the US government’s financing costs by hundreds of billions of dollars.

The Fed has faced a delicate balancing act in setting rates at a level that not only guards against a sharp rise in unemployment, but also keeps price pressures in check.

The US economy added just 50,000 jobs in December, according to bureau of labor statistics figures that offer the latest sign — after years of stellar performance — that hiring in the world’s largest economy is beginning to slow. Unemployment fell slightly to 4.4 per cent last month, down from a revised 4.5 per cent rate in November.

However, the Fed’s preferred measure of inflation climbed to 2.8 per cent in November from 2.7 per cent in October, according to the most recent figures. It has been above the central bank’s 2 per cent goal since early 2021. – Copyright The Financial Times Limited 2026