The Federal Reserve held its federal funds target range at 3.75% to 4% on Wednesday, as markets broadly expected. Spot gold fell 0.60% to $4,035.48 an ounce after the decision. The Fed offered no specific guidance on its next move, leaving the outlook dependent on incoming economic and inflation data.
Fed keeps its target range at 3.75% to 4%
The Federal Open Market Committee (FOMC) said the decision supports the Fed’s dual mandate and its policy of maintaining ample reserves in the banking system. The vote leaves short-term borrowing costs unchanged for now.
The Fed described US economic activity as expanding at a solid pace. Domestic spending remained resilient, while productivity growth was strong and capital investment held up. Employment gains were in line with the size of the labor force, and the unemployment rate changed little. The committee said uncertainty remained elevated, including because of geopolitical developments.
Cook and Hammack favored a 25-basis-point hike
Lisa Cook and Beth Hammack dissented, opposing both the decision to hold rates and the statement. They preferred to raise the federal funds target range by 25 basis points at this meeting. The 10-2 vote showed broad support for leaving rates unchanged, alongside disagreement over the policy decision.
The Fed also said inflation remained elevated. It said more information was needed to determine what policy stance would bring inflation back to its 2% goal in a timely way, and reaffirmed its commitment to price stability. The statement did not indicate whether the committee would raise, cut or hold rates at its next meeting.
Gold slips after the decision
Spot gold traded at $4,035.48 an ounce after the announcement, down 0.60% on the day. Gold is sensitive to interest-rate expectations, and prices moved as markets assessed the Fed’s comments on inflation and economic conditions, as well as the split vote. The statement provided no clear path for future rates, leaving expectations subject to new data.
For precious-metals markets, the key considerations remain the rate outlook and inflation. The Fed described economic growth and employment as steady, while saying inflation was still elevated. Two officials backed a rate increase, but the committee made no commitment to a future move. Gold’s 0.60% decline reflected the market’s immediate response to those signals.