Policymakers left borrowing costs unchanged for a third consecutive meeting, citing mixed signals on inflation and labor market resilience

The central bank held its benchmark interest rate steady on Wednesday for the third consecutive meeting, signaling a cautious approach as policymakers weigh persistent inflation pressures against signs of a cooling labor market.

The Monetary Policy Council voted 7-2 to maintain the benchmark rate at 4.75 percent, in line with most analyst expectations. In its accompanying statement, the council said recent economic data presented a mixed picture, with inflation easing more slowly than anticipated even as job growth showed early signs of moderation.

“We are not yet confident that inflation is on a sustainable path back to target, and we want to avoid premature action that could undo recent progress,” said Governor Elise Marchetti during a press briefing following the announcement. Marchetti’s remarks are illustrative of the broader cautious tone struck by policymakers Wednesday.

Mixed Signals Drive the Decision

According to the council’s policy statement, officials pointed to recent data showing core inflation running slightly above projections for a second straight month, even as separate figures indicated softer hiring activity across several sectors. The combination, officials said, complicates the case for either an immediate rate cut or further tightening.

Two council members dissented from Wednesday’s decision, reportedly favoring a quarter-point cut given early signs of labor market softening. Minutes from the meeting, expected to be released in the coming weeks, are likely to shed further light on the internal debate.

What Investors Are Watching

Market reaction to the announcement was relatively muted, with analysts noting the decision had been widely anticipated. Attention has now shifted to upcoming inflation and employment reports, which officials say will heavily influence the council’s next move.

“The central bank has made clear it wants more confirmation before shifting course in either direction,” said Priya Nakamura, senior economist at the Calder Group, in comments framed as illustrative of broader market sentiment. Analysts expect the next policy meeting to be closely watched for any change in tone.