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Fed chair Jerome Powell speaks at a conference in Chicago. Photo: Scott Olson via Getty Images

The Federal Reserve kept interest rates on hold on Wednesday, but signaled that rate cuts could be coming down the road. It removed the key word "patient" from its policy statement, while noting that "uncertainties" about its previously rosy economic outlook have increased.

Why it matters: This marks a significant shift in tone for the central bank. Fed Chairman Jerome Powell is facing pressure with roaring markets pricing in a number of rate cuts before the end of the year and an economy that’s thought to be on shaky ground. In the meantime, President Trump has been trying to strong-arm the Fed to put the U.S. on a "level playing field" by lowering interest rates.

Details: Powell told reporters at a press conference that a number of "crosscurrents" — including heightened trade tensions between the U.S. and China — have re-emerged since the Fed's last meeting, raising concerns about the global economy. Still, the Fed's median target for GDP growth in 2019 remained at 2.1%, while GDP growth next year was upgraded to 2.0% from 1.9%. In the meantime, the Fed pretty dramatically scaled back its expectations for inflation this year.

  • Powell said that the Fed would not "overreact" to a single data point (i.e. the weak jobs growth last month).
  • Of note: This is the first rate decision in Powell's term that wasn't unanimous. The dissenter was St. Louis Fed president James Bullard, who said the Fed should have cut rates by 25 basis points.

Powell didn't directly acknowledge Trump's recent Fed attacks, including recent reports that Trump looked into the legality of "demoting" Powell.

  • What Powell did say: “I think the law is clear that I have a four year term, and I fully intend to serve it."

The bottom line: "The Fed appears to be focused on walking a fine line, attempting to provide reassurance that the economy remains on track, while still opening the door even further to the potential for rate cuts in the coming months with the goal of extending the current [economic] expansion," Jim Baird, chief investment officer at Plante Moran, an investment firm, wrote in a note to clients.

Go deeper

Updated 2 hours ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: CDC director says number of U.S. Omicron cases "likely to rise" — Two years of COVID-19 — Prior coronavirus infections may not protect well against Omicron.
  2. Vaccines: Data demonstrates most-vaccinated counties less vulnerable to worst of COVID — Omicron adds urgency to vaccinating world — Omicron fuels the case for COVID boosters.
  3. Politics: Nevada to impose insurance surcharge on unvaccinated state workers — New Jersey GOP lawmakers defy statehouse COVID policy — Oklahoma sues Biden administration over Pentagon vaccine mandate.
  4. World: Vaccine mandates lose steam in the U.S. while Europe doubles downWHO: Delta health measures help fight Omicron — COVID cases surge in South Africa in sign Omicron wave is coming.
  5. Variant tracker: Where different strains are spreading.

Vulnerable Democrats: Less Trump talk

Illustration: Aïda Amer/Axios

Vulnerable House Democrats are convinced they need to talk less about the man who helped them get elected: President Trump.

Why it matters: Democrats are privately concerned nationalizing the 2022 mid-terms with emotionally-charged issues — from Critical Race Theory to Donald Trump's role in the Jan. 6 insurrection — will hamstring their ability to sell the local benefits of President Biden's Build Back Better agenda.

Updated 4 hours ago - Politics & Policy

Bipartisan tributes flood in for "giant of the Senate" Bob Dole

Then-Vice President Joe Biden and former Sen. Bob Dole at an event put on by the World Food Program at which he was awarded the first “McGovern-Dole Leadership Award” in December 2013. Photo: Douglas Graham/CQ Roll Call

Republican and Democratic politicians, including former Senate colleagues, are sharing condolences and memories commemorating the life of Bob Dole, who passed away at 98 on Sunday morning.

The big picture: Dole, the Republican presidential nominee in 1996, was the longest-serving Republican leader in the Senate until 2018, when current Senate Minority Leader Mitch McConnell surpassed his record.