Door Ajar

The Federal Reserve left the door ajar at Wednesday’s Federal Open Market Committee (FOMC) meeting, not fully open nor closed, but just wide enough to keep markets guessing about the next steps. The Committee delivered another quarter‑point rate cut, bringing the federal funds target range to 3.5%–3.75%, even as three officials dissented (up from two at the last meeting), underscoring how divided the Fed has become over the pace of easing. The Fed is peering out at a mixed data landscape (cooler but not collapsing growth, moderating but still-watchful inflation) and is not yet prepared to step through to an outright easing regime.​

In the coming months, that narrow opening gives the Fed optionality. If incoming data show further progress on inflation alongside softer hiring, officials have signaled that additional cuts are possible. Conversely, if consumer demand and services inflation remain firm, the current range could be maintained for longer. Collectively, the FOMC members seem to have their hands on the doorknob, jockeying to move policy either way.​

But another door also remains ajar in the Eccles Building. Jerome Powell’s future role beyond his term as Chair remains unresolved. His chairmanship runs through May 2026, but his underlying Board of Governors term extends to early 2028. On Wednesday he explicitly declined to say whether he would remain as a governor once a successor is appointed as Chair when asked by a reporter. For markets, this leadership question makes it more challenging to know what lies beyond the threshold of the door it is quickly approaching. Until that door swings fully open, elevated uncertainty will remain a defining feature of the monetary landscape.