Federal Reserve Keeps Key Interest Rate Unchanged as Expected

SadaNews Economy - On Wednesday, the U.S. Federal Reserve (the central bank) kept the key overnight interest rate unchanged in a range between 3.50% and 3.75%, during its last official meeting under the chairmanship of Jerome Powell, whose term ends in mid-May 2026.

The Federal Reserve stated that recent indicators suggest that economic activity continues to expand at a strong pace, while job gains have remained low on average, with the unemployment rate showing little change.

In the largest division since the 1990s, the Fed indicated that the vote on the policy was 8 to 4, with Stephen Miran opposing it, preferring a quarter-point rate cut, while both Beth Hammack and Neel Kashkari, along with Lori Logan, opposed including a dovish stance in the statement.

The Fed described inflation as "high," compared to the previous description of "somewhat high," noting the impact of global energy prices.

It also confirmed that the committee is monitoring risks that threaten both sides of its dual mandate, pointing out that developments in the Middle East contribute to increasing uncertainty regarding economic forecasts.

The Fed emphasized that when considering the size and timing of any additional interest rate adjustments, the committee will carefully evaluate incoming data, along with the evolution of forecasts and risk balances.

Investors are awaiting comments from U.S. Federal Reserve Chairman Jerome Powell to assess the impact of the Iran war on the economy amid stalled peace talks.

Powell will preside over what could be his last meeting of the Open Market Committee, responsible for managing monetary policy, and will hold the traditional press conference this afternoon U.S. time, where he may indicate that he might take the unusual step of remaining as a member of the Board of Governors even after his chairmanship ends on May 15.

Separately, the Senate Banking Committee is set to vote on the appointment of Kevin Warsh to succeed Powell. The committee vote is expected to be on a fully partisan basis, a process that could take up the entire next month.

President Donald Trump announced in January that he had chosen Warsh as the new chair of the Federal Reserve. Last year, Warsh expressed his support for President Trump's calls for interest rate cuts, which prompted many congressional Democrats to question his independence as board chair.