Fed holds rates steady amid dissent; Powell signals he'll remain on Board until investigation ends
The Federal Reserve kept interest rates unchanged at 3.5%-3.75% on Wednesday amid persistent inflation and uncertainty from the Iran war. The decision marked an unusually divided Fed with four dissents—the most since 1992—as Fed Chair Jerome Powell indicated he would stay on the Board after stepping down as chair next month.
Unusual Fed Dissent Over Rate Path
An unusually divided Federal Reserve held its key interest rate steady. Policymakers are grappling with the challenge of balancing the threats of persistent inflation and a softening labor market. In what may have been Chair Jerome Powell's final meeting at the helm, the rate-setting Federal Open Market Committee voted to hold the benchmark funds rate in a range between 3.5%-3.75%.
Record Dissents Signal Deep Disagreement
Eight officials voted to maintain rates. However, three officials dissented in favour of removing the reference to a future cut, while a fourth, Stephen Miran, an appointee of US President Donald Trump, dissented in favour of an immediate rate cut — marking the most dissents at the central bank since October 1992.
Powell to Remain on Board
He is due to step down from the top job in mid-May, although his term as a Fed governor doesn't expire until January 2028. During a news conference, Powell said he plans to continue to serve on the Board of Governors until an investigation of the Federal Reserve is "well and truly over with transparency and finality."
Inflation and War Uncertainty Cloud Outlook
"Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook," the Fed said in a statement. "Inflation is elevated, in part reflecting the recent increase in global energy prices," it added.