The Federal Reserve (Fed) left its policy rate unchanged at 3.50% to 3.75%, but the overall message from both the statement and Chair Jerome Powell’s press conference leans firmly towards patience rather than any imminent pivot to easing.

The economic backdrop remains broadly supportive, with activity still expanding at a solid pace and consumer spending holding up, while the labour market is cooling but not deteriorating sharply. Inflation, it seems, is sticking around longer than anticipated. Recent developments, especially in energy and tariffs, are throwing a wrench into the disinflationary efforts, and we're likely to see price pressures increase in the near future.

The latest projections back this up, as inflation forecasts have been adjusted upward, and there's a noticeable shift among policymakers, signalling fewer rate cuts, even if the median path stays the same.

Powell echoed that cautious stance, stressing that the Fed is not prepared to look through inflation lightly and that renewed, convincing progress, especially in goods, is required before easing can be considered. At the same time, he emphasised that policy is already at or slightly above neutral and that hikes are not the base case, leaving the Fed with a genuinely two-sided, but clearly asymmetric, reaction function.

To sum up: the Fed stays on hold but signals higher-for-longer, with the bar for rate cuts raised and inflation risks still firmly in focus.