WASHINGTON, D.C. — The Federal Reserve held its benchmark interest rate unchanged for the third consecutive meeting on April 28, 2026, maintaining the federal funds rate in a range of 3.5% to 3.75%. The CME FedWatch tool had forecasted a 100% probability that officials would maintain the current rate.

The Federal Open Market Committee cited developments in the Middle East as creating a high level of uncertainty about the economic outlook and stated that elevated inflation is tied to the recent increase in global energy prices. The committee reiterated its goal of achieving a 2% annual inflation rate. Four members of the FOMC dissented in the vote, with Governor Stephen Miran voting in favor of a 0.25-percentage-point rate cut. Three other members supported maintaining the current rate but opposed wording that signaled an easing bias.

Brian Coulton, chief economist at Fitch Ratings, said: "But it is notable that the press release still refers to the Committee 'considering the extent and timing of additional adjustments' to rates and hence maintains a bias towards further cuts ahead. This wording was clearly a topic of much debate given the oil price shock, with three members deciding not to support the inclusion of an easing bias in the statement."

The Fed last cut interest rates in December 2025, when the Consumer Price Index was 2.7% on an annual basis. The CPI was 3.3% in March 2026, and economists forecast that April 2026's inflation rate could rise to 3.9% annually due to higher oil and gas prices, according to FactSet.

Since the war in Iran began on February 28, global energy costs have spiked, pushing the average U.S. price for a gallon of gasoline to $4.23, about $1.25 higher than before the conflict. Brent crude oil traded at $111 per barrel.

"The FOMC met expectations and held rates steady today. As the effects of the Middle East conflict become more pronounced, the case for maintaining policy rates rests on rising inflation risks, while risks to U.S. growth appear contained for now," said Atsi Sheth, chief credit officer at Moody's Ratings.

Christian Hoffmann, head of fixed income at Thornburg Investment Management, said futures markets had shifted their outlook for the year. "We've gone from being nearly halfway through the year with no rate cuts to that now becoming the base case for the rest of the year. That could change quickly if the data shifts, but as of now, the market is pricing in less than a 25% chance of any cuts for all of 2026," he said.

The S&P 500 index slipped 0.5% from a record high in early trading, while the Nasdaq Composite dropped over 300 points, falling nearly 1%. The Dow Jones Industrial Average remained almost flat. U.S. bond yields climbed to near 4.37%.