US Fed holds rates steady even as Trump pressure puts independence in focus

Federal Reserve

The US Federal Reserve, led by Chair Jerome Powell, has held interest rates steady, defying President Donald Trump’s repeated calls for sharp cuts. Markets had largely anticipated the decision, with traders assigning only a slim chance of a rate cut, leaving the benchmark rate unchanged in the 3.5 percent to 3.75 percent range.

The US central bank said, "Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated."

The central bank signaled a cautious approach following its last December gathering, with Powell noting officials were "well positioned to wait" and observe economic developments. Rate adjustments by the Fed eventually ripple through consumer and business lending markets, though bond traders and other factors also shape those borrowing costs.

Trump criticized the last rate cut as insufficient, saying it should have been double, and stated he wants a future Fed leader who will be "honest" about rates.

The president appointed Powell in 2017 but later expressed frustration over what he viewed as inadequate rate cuts. Adding complexity to this week's proceedings: the Justice Department recently subpoenaed Fed officials regarding Powell's congressional testimony last June concerning a $2.5 billion construction project.On January 27, Trump indicated he'll soon reveal his pick for the next Fed chair.

BlackRock's Rick Rieder, who manages fixed-income strategy at the $14 trillion asset manager, has emerged as a leading candidate according to multiple outlets.

Kevin Warsh, who helped navigate the 2008 financial meltdown as a Fed governor, is also reportedly under consideration.Powell's chairmanship concludes in May 2026, after which he'll remain a board member through 2028 regardless of Trump's selection.