The U.S. Central Bank, the Federal Reserve (Fed), kept the benchmark interest rate unchanged for a third straight meeting, holding it at the current 3.50–3.75%.
With economic uncertainty growing due to a surge in energy prices and the prolonged conflict in the Middle East, pushback also mounted against the administration's pressure for rate cuts. Along with this, Federal Reserve Chair Jerome Powell signaled a clash with U.S. President Donald Trump by declaring he will remain on the Fed's Board of Governors after his chair term ends.
On the 29th (local time), the Fed held a regular Federal Open Market Committee (FOMC) meeting and decided to keep rates on hold. At this meeting, four dissenting votes were cast—the first time in 34 years since October 1992—laying bare internal divisions at the Fed.
Fed Governor Steven Meier opposed the hold, arguing for a 0.25 percentage point rate cut. By contrast, Cleveland Federal Reserve Bank President Beth Hammack, Minneapolis Federal Reserve Bank President Neel Kashkari, and Dallas Federal Reserve Bank President Lorie Logan supported holding rates but opposed maintaining a dovish stance that would signal rate cuts in the future path of monetary policy.
Powell's moves also sent shock waves. Powell's term as chair ends on May 15. Breaking the long-standing custom of leaving the organization when a new chair takes office, Powell plans to remain on the Board of Governors until early 2028. This is seen as a show of strong resolve not to back down in the face of pressure from the Trump administration targeting him, including investigations into the expense for renovating the Fed's headquarters. At a press conference, Powell sharply criticized, saying, "A series of legal attacks on the Fed is truly concerning, and it threatens our ability to conduct monetary policy without regard to political considerations," adding, "These attacks are damaging the institution, and that worries me." He continued, "I have said I would not leave the Board until the investigation is fully completed transparently and definitively, and I will stick to that position."
Trump, meanwhile, openly pressed again for rate cuts, challenging the Fed's independence. At the White House, when asked by reporters whether Kevin Warsh, nominated as the next Fed chair, would lower rates, Trump said, "We'll see, but he should," adding, "Now is the right time to cut rates."
The U.S. economy is currently experiencing supply shocks from tariffs and the Middle East conflict. With rising energy prices layered on, inflation remains in the 3% range, above the Fed's 2% target. Even if nominee Warsh takes office, the calculus of monetary policy is expected to become more complex amid entrenched inflation concerns and presidential pressure to cut rates.