The U.S. Federal Reserve kept interest rates steady on Wednesday, meeting investor expectations as Chairman Jerome Powell bemoans the nation’s slow job while marking an overall positive assessment, stating the U.S. economy is ”expanding at a solid pace.”
The Federal Reserve Open Market Committee (FOMC), which sets lending rates for major institutional U.S. banks, voted to keep rates between 3.50% to 3.75%.
Powell warned that inflation remained “somewhat elevated” as unemployment stabilizes, pledging to work to see inflation rest at the preferred 2% target rate before moving back on track to the rate-cutting cycle witnessed at the end of last year.
The Fed reduced rates three times in 2025 as Chairman Powell remains in the hot seat in the eyes of the White House, which has pressured the Central Bank to aggressively begin slashing rates.
The Fed, however, has continued to express uncertainty around the nation’s economic situation, anxious to avoid premature rate-cutting procedures to then be forced to immediately re-increase rates once again, risking undermining the public’s confidence in the institution, which Powell has vowed to safeguard while asserting the Fed’s autonomy from political influence and the executive branch.
President Trump is expected to announce a replacement for the current Federal Reserve Chairman, Jerome Powell, this week. Analysts have projected Christopher Waller as one of Trump’s prime candidates. However, Polymarket has odds that currently favor BlackRock’s Chief Investment Officer for global fixed income, Rick Reider, at about 55%.
The precarious future for the Fed’s leadership also comes at a time when the Fed Chairman announced to the public two weeks ago that a criminal investigation into Powell was launched by the Department of Justice, regarding allegations of false statements made before a 2025 Congressional hearing on renovation costs for the Fed’s headquarters in Washington, D.C.
Prosecutors are investigating whether Powell committed perjury when answering questions on cost overruns on a $2.5 billion makeover of the Federal Reserve building.
The investigation follows a criminal referral made by U.S. Representative Ana Paulina Luna, a Republican from Florida’s 13th Congressional District.
Powell, who is expected to end his term in May, has reportedly yet to comply with the grand jury subpoenas, accusing the Trump administration of using the federal probe as a “pretext” to pressure the Central Bank to reduce rates.
President Trump, on the other hand, denies any involvement with the probe, instead criticizing Chairman Jerome Powell as an “incompetent” Fed chair.
