The US Federal Reserve keeps rates at 3.50%-3.75% as Powell resists political pressure and monitors inflation trends
WASHINGTON: The US Federal Reserve held interest rates steady at its first policy meeting of the year, resisting mounting pressure from President Donald Trump for cuts.
The Federal Open Market Committee voted 10-2 to maintain the benchmark rate in a range of 3.50% to 3.75%, a widely expected pause following three consecutive cuts.
In a statement, policymakers noted economic activity was “expanding at a solid pace” and the unemployment rate showed signs of stabilisation.
The decision puts the central bank at odds with Trump, who has sharply escalated his targeting of the Fed since returning to the White House.
Fed Governors Stephen Miran and Christopher Waller both dissented, preferring a quarter-percentage-point rate cut.
Miran, a Trump appointee whose term ends this month, had pushed for larger reductions at the previous three meetings.
Chairman Jerome Powell stressed at a press briefing that he did not believe the bank would lose its political independence.
Trump has sought to oust Fed Governor Lisa Cook over fraud allegations and launched an investigation into Powell over a headquarters renovation.
Powell recently criticised the threat of criminal charges against him, calling it a question of whether policy would be “directed by political pressure or intimidation.”
He told reporters the case involving Cook is “perhaps the most important legal case in the Fed’s 113-year history.”
Navy Federal Credit Union chief economist Heather Long said the Fed is “in no hurry to cut interest rates again” and described policymakers as being “in a stalemate.”
Powell said the Fed would let economic data “light the way” on future decisions, with a weakening labour market or cooling inflation potentially tipping the balance.
He noted inflation from tariffs could peak in the “middle quarters” of the year but cautioned that was hard to predict precisely.
“We need to keep our eye on inflation and not declare victory prematurely,” Powell added.
Financial markets generally expect the Fed to keep rates unchanged until its June meeting, according to CME FedWatch.
Powell’s term as chairman ends in May, with Trump’s new appointee expected to take office and potentially shape future policy.
Asked for advice for his successor, Powell said: “Don’t get pulled into elected politics.”
Analysts will monitor whether a new chief can steer the committee toward more cuts while maintaining the bank’s independence in pursuing stable inflation and maximum employment.
