Fed keeps interest rates unchanged as markets turn to Powell’s final remarks

The Federal Reserve left US interest rates unchanged as policymakers chose to maintain a cautious stance amid persistent inflation pressures and uncertainty over the economic outlook. The decision kept the benchmark rate in the 3.50% to 3.75% range, while the Fed signaled that future moves will depend on incoming data, inflation trends and broader financial conditions.

Fed holds rates steady

The Federal Reserve announced that it would keep its policy rate unchanged at 3.50% to 3.75%.

The decision came in line with market expectations, as elevated inflation and energy price pressures continue to limit the room for an immediate rate cut.

Inflation remains a key concern

The Fed’s wait-and-see approach comes after March inflation rose to 3.3%, up from February and the highest level since May 2024.

With energy prices still feeding into inflation expectations, policymakers opted against lowering borrowing costs at this meeting.

Statement hints at possible future cuts

While rates were left unchanged, the Fed’s statement pointed to the possibility of future adjustments if economic data supports such a move.

The wording was interpreted by Fed watchers as an “easing bias,” suggesting the central bank could consider a rate cut at its next meeting if inflation, employment and growth data allow it.

Rare split inside the Fed

The decision also exposed divisions within the Federal Reserve. Four governors dissented or objected to parts of the decision and statement, marking the first such split since October 1992.

Stephen Miran, an ally of President Donald Trump, supported a 0.25 percentage point rate cut. Three other governors opposed the language suggesting a possible move toward easing at the next meeting.

Powell expected to speak

Fed Chair Jerome Powell is expected to address the decision shortly after the announcement. This is widely expected to be Powell’s final rate decision as head of the central bank. His term has been marked in recent months by pressure from President Trump, who has repeatedly called for lower interest rates.

Kevin Warsh moves closer to Fed chair role

Trump’s pick to replace Powell, Kevin Warsh, has taken another step toward the top job after being approved by the Senate Banking Committee.

Warsh still needs approval from the full Senate before officially taking over as Federal Reserve chair.

June meeting in focus

Markets will now focus on the Fed’s next meeting in June. Whether the central bank moves toward a rate cut will depend on inflation data, job growth, energy costs and the broader outlook for the US economy.