The Big Story 

The Federal Reserve’s interest rate setting committee held rates steady on Wednesday, its third rate hold in a row, despite calls from President Trump to lower borrowing costs.

© The Associated Press

The move was in line with market expectations. One prediction algorithm based on future contract prices put the probability of a hold at about 98 percent just prior to Wednesday’s announcement.

Fed officials had also emphasized the sturdiness of the domestic economy and the uncertainty driven by Trump’s tariffs, along with how they complicated plans for future rate cuts.

“The labor market is sold, inflation is low. We can afford to be patient as things unfold. There’s no real cost to our waiting at this point,” Fed Chair Jerome Powell said.

“There’s a great deal of uncertainty about … where tariff policies are going to settle out and also, when they do settle out, what will be the implications for the economy, for growth and for employment,” he added.

Trump has been calling on the Fed and Powell to lower interest rates and has raised the pressure as his trade war with China drags on.

To date, the U.S. has had no trade meetings with China, its main rival in the trade war. China and the U.S. have put triple-digit tariffs on each other, leading to a major slowdown in commercial activity between the two countries.

The Hill’s Tobias Burns has more here.

Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

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Essential Reads 

Key business and economic news with implications this week and beyond:

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Tax Watch 

Welcome to Tax Watch, a new feature in The Hill’s Business & Economy newsletter focused on the fight over tax reform and the push to extend the 2017 Trump tax cuts this year.

SALT deal elusive as moderates, hardliners dig in

House Republicans have yet to strike a deal on how to address the state and local tax (SALT) deduction cap, a lingering hang-up that has emerged as one of the biggest sticking points in the party’s bill full of President Trump’s legislative priorities.

Reps. Andrew Garbarino (R-N.Y.) and Young Kim (R-Calif.) — co-chairs of the SALT Caucus — huddled with members of the House Ways and Means Committee during their weekly lunch meeting on Wednesday to discuss the deduction cap, which Republicans from high-tax blue states wants to raise, but deficit hawks are skeptical of.

Leaving the gathering, key lawmakers said an agreement was still elusive.

“I don’t think there’s any deal,” said Rep. David Schweikert (R-Ariz.), who sits on the Ways and Means Committee. “Not yet.”

Rep. Nicole Malliotakis (R-N.Y.), a member of the SALT Caucus and Ways and Means panel, said the group is “still working it out,” adding: “We have been discussing a whole bunch of options inside, so we don’t have any particulars just yet.”

Read more here.

The Ticker 

Upcoming news themes and events we’re watching:

In Other News 

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What People Think 

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