The Federal Reserve held US interest rates steady on Wednesday, marking what is expected to be Jerome Powell's last meeting as chair. The decision kept the federal funds rate between 3.5% and 3.75%, as the central bank navigates economic uncertainty stemming from the ongoing Iran war and rising inflation.
Here are four key takeaways from Powell's press conference and the broader implications for the US central bank.
Interest Rates Held as Iran War Uncertainty Looms
The Fed maintained its cautious stance amid the economic fallout from the Iran conflict. Rising energy costs have pushed up inflation, with March's figure hitting 3.3%—the highest since May 2024. The central bank's statement hinted at potential rate cuts in future meetings, but analysts warn that fresh oil price spikes could delay cuts until 2027.
Powell to Remain as Fed Governor Until Probe 'Well and Truly Over'
Although stepping down as chair, Powell will stay on as a Fed governor until 2028. He stated he will not leave until a Trump administration investigation into him and the bank is "well and truly over." The move may disappoint President Trump, who has frequently clashed with Powell, and could bring extra scrutiny to his successor's decisions.
Legal Attacks Are 'Battering' the Fed
Powell warned that the Trump administration's legal assaults are more serious than verbal criticism, risking the Fed's ability to conduct monetary policy independently. He described the attacks as "unprecedented in our 113-year history" and said they threaten public trust.
Warsh Confirmation Now a Formality
Kevin Warsh, Powell's successor, gained key Senate committee approval after a hold was lifted. A full Senate vote is expected to be a formality, with Warsh possibly taking office before Powell's term ends on May 15. Powell congratulated Warsh and wished him well.