The Federal Reserve maintained its benchmark interest rate between 3.5% and 3.75% during what is expected to be Jerome Powell's final meeting as chair. This decision comes amidst escalating geopolitical tensions from the Iran war, which has driven up energy and consumer prices. Despite President Trump's continued criticism and pressure for rate cuts, the Fed cited economic uncertainty as a reason to hold rates steady, waiting for clarity on the conflict's impact.
Powell confirmed he will remain on the Fed's board of governors until a Justice Department probe is fully resolved, vowing to maintain a low profile and not act as a "shadow chair" to his successor. He warned that "legal assaults" from the Trump administration are "battering the institution" and jeopardizing the Fed's ability to conduct monetary policy independently. These legal challenges are described as unprecedented in the Fed's 113-year history.
Meanwhile, Kevin Warsh's confirmation as Powell's successor is now considered a formality. Following the dropping of the probe into Powell, Senator Thom Tillis lifted his hold on Warsh's appointment, paving the way for a likely confirmation by the Republican-controlled Senate.