By Jacqueline Policastro | Quincy News Correspondent
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Washington (Quincy News) — The Federal Reserve left interest rates unchanged Wednesday in what may be the final policy meeting led by Chair Jerome Powell, closing a chapter as the central bank navigates a leadership transition amid mounting political pressure.
The Federal Open Market Committee (FOMC) voted to keep the benchmark funds rate at 3.5%-3.75%, maintaining its current policy stance as officials weigh persistent inflation pressures against a still-resilient economy.
Speaking in his post-meeting press conference, Powell said, “The U.S. economy has just powered through shock after shock and consumers are still spending.”
Eight officials voted to hold rates steady, but the decision drew four dissents. Three objected to language signaling a future cut, while a fourth, Stephen Miran, pushed for an immediate rate cut.
Wednesday’s meeting comes just weeks before Powell’s term as chair ends on May 15, marking his final appearance leading a rate decision after nearly eight years at the helm of the central bank.
Powell, however, is not leaving the Federal Reserve immediately. He will remain on the Board of Governors for a period yet to be determined, saying he intends to “keep a low profile as governor.” He said he had long planned to retire from public service, but recent legal actions by the Trump administration left him “no choice but to remain in place for now.”
President Donald Trump has nominated former Fed Governor Kevin Warsh to replace Powell. The Senate Banking Committee on Wednesday voted 13-11 to advance Warsh’s nomination to the full Senate, where confirmation is expected.
Warsh, a former banker who served on the Fed board during the 2008 financial crisis, could take over as chair as soon as the next policy meeting if confirmed.
The leadership transition accelerated last week when the Department of Justice (DOJ) dropped a criminal investigation into Powell tied to cost overruns during the Federal Reserve’s multi-billion-dollar renovation of its Washington headquarters.
“I’ve said that I will not leave the board until this investigation is well and truly over with transparency and finality. And I stand by that. I’m encouraged by recent developments and I’m watching the remaining steps in this process carefully,” said Powell.
The probe had become a political flashpoint and had delayed Warsh’s confirmation after some senators, including Republican Thom Tillis of North Carolina, said they would not support the nomination while the investigation was pending.
Prosecutors closed the case last week and referred questions about the renovation spending to the Federal Reserve’s inspector general.
Against that political backdrop, policymakers are still grappling with a central question: whether inflation is falling fast enough to justify lowering interest rates.
Inflation remains above the Fed’s long-term 2% target, fueled in part by rising energy costs linked to tensions in the Middle East.
“If this goes on for much longer and prices go much higher then we’ll feel that much more,” said Powell.
At the same time, the labor market remains strong, with unemployment around 4.3%, giving policymakers room to hold rates steady while they assess incoming data.
Major stock indexes ended mixed Wednesday with the Dow Jones Industrial Average falling 280 points, while the S&P 500 slipped slightly and the Nasdaq edged higher ahead of major tech earnings.
Markets are now watching closely for signals about when the central bank could begin lowering borrowing costs.
Powell declined to outline a specific timeline, but said policymakers will continue evaluating economic data in the months ahead.
The Fed’s next policy meeting is scheduled for June 16 and 17.
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