Research
April 29, 2026
Monetary Policy
Federal Reserve leaves rates unchanged but with an uncertain 2026 outlook
At its April 28–29 meeting, the Federal Open Market Committee (FOMC) left short‑term interest rates unchanged, marking a third consecutive meeting without changes following three straight 25‑basis‑point cuts at the end of 2025. The federal funds rate remains in a target range of 3.50% to 3.75%.
The meeting—and the accompanying statement and press conference—stood out for two reasons. First, it was the final FOMC meeting chaired by Jerome H. Powell, whose term as chair ends on May 15. Powell’s term as a member of the Board of Governors runs through 2028, and he indicated during the press conference that he intends to remain on the Board for a “period of time.” Former Governor Kevin M. Warsh appears poised to secure confirmation as Powell’s successor and would likely preside over the next FOMC meeting on June 16–17.
Second, the meeting was notable for the number of dissents, which were the most since October 1982. Governor Stephen I. Miran once again dissented in favor of an immediate quarter‑point rate cut. In addition, three regional Federal Reserve Bank presidents dissented over the inclusion of what they viewed as an easing bias in the policy statement.
Their objection amounted to a signal that, amid heightened uncertainty surrounding the economic and inflation outlook, they were unwilling to pre‑commit to future rate cuts and wanted to preserve the possibility that rates could move higher if conditions warranted. Those dissenters were Beth M. Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie K. Logan (Dallas).
This dissent does not imply that rate increases are imminent. However, it underscores the growing complexity of monetary policymaking in the current environment, particularly given re‑accelerating price pressures and the ongoing war in Iran. The Committee explicitly acknowledged this uncertainty, noting that “developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.” The statement also highlighted how elevated global energy costs are continuing to place upward pressure on inflation, which remains well above the Committee’s 2% target as measured by the PCE deflator.
The FOMC reaffirmed that 2% PCE inflation remains the benchmark most consistent with its dual mandate of maximum employment and price stability and will continue to guide policy decisions. At the same time, the Committee offered a cautiously optimistic assessment of economic conditions. The U.S. economy is described as expanding at a “solid pace,” with job growth moderating but the unemployment rate “little changed in recent months,” indicating only modest softening in labor‑market conditions.
Taken together, the Fed finds itself navigating a difficult tradeoff. Slowing hiring and rising downside risks to the outlook argue for lower interest rates to support growth. Yet, inflation pressures remain stubborn and, in recent months, have moved in the wrong direction—particularly while geopolitical tensions continue to keep energy prices elevated. In this context, the Committee is likely to maintain a cautious posture, holding policy steady as it evaluates incoming data. While an interest rate cut later this year remains possible, near‑term action appears unlikely absent clearer evidence of sustained disinflation.
For the restaurant industry, elevated interest rates continue to weigh on borrowing costs, often slowing expansion, renovation, and other capital investments. A lower‑rate environment—should it materialize later this year—would help ease credit burdens, strengthen consumer spending, and support demand in sectors highly sensitive to discretionary income, including foodservice and hospitality.
The meeting—and the accompanying statement and press conference—stood out for two reasons. First, it was the final FOMC meeting chaired by Jerome H. Powell, whose term as chair ends on May 15. Powell’s term as a member of the Board of Governors runs through 2028, and he indicated during the press conference that he intends to remain on the Board for a “period of time.” Former Governor Kevin M. Warsh appears poised to secure confirmation as Powell’s successor and would likely preside over the next FOMC meeting on June 16–17.
Second, the meeting was notable for the number of dissents, which were the most since October 1982. Governor Stephen I. Miran once again dissented in favor of an immediate quarter‑point rate cut. In addition, three regional Federal Reserve Bank presidents dissented over the inclusion of what they viewed as an easing bias in the policy statement.
Their objection amounted to a signal that, amid heightened uncertainty surrounding the economic and inflation outlook, they were unwilling to pre‑commit to future rate cuts and wanted to preserve the possibility that rates could move higher if conditions warranted. Those dissenters were Beth M. Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie K. Logan (Dallas).
This dissent does not imply that rate increases are imminent. However, it underscores the growing complexity of monetary policymaking in the current environment, particularly given re‑accelerating price pressures and the ongoing war in Iran. The Committee explicitly acknowledged this uncertainty, noting that “developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.” The statement also highlighted how elevated global energy costs are continuing to place upward pressure on inflation, which remains well above the Committee’s 2% target as measured by the PCE deflator.
The FOMC reaffirmed that 2% PCE inflation remains the benchmark most consistent with its dual mandate of maximum employment and price stability and will continue to guide policy decisions. At the same time, the Committee offered a cautiously optimistic assessment of economic conditions. The U.S. economy is described as expanding at a “solid pace,” with job growth moderating but the unemployment rate “little changed in recent months,” indicating only modest softening in labor‑market conditions.
Taken together, the Fed finds itself navigating a difficult tradeoff. Slowing hiring and rising downside risks to the outlook argue for lower interest rates to support growth. Yet, inflation pressures remain stubborn and, in recent months, have moved in the wrong direction—particularly while geopolitical tensions continue to keep energy prices elevated. In this context, the Committee is likely to maintain a cautious posture, holding policy steady as it evaluates incoming data. While an interest rate cut later this year remains possible, near‑term action appears unlikely absent clearer evidence of sustained disinflation.
For the restaurant industry, elevated interest rates continue to weigh on borrowing costs, often slowing expansion, renovation, and other capital investments. A lower‑rate environment—should it materialize later this year—would help ease credit burdens, strengthen consumer spending, and support demand in sectors highly sensitive to discretionary income, including foodservice and hospitality.