US Federal Reserve Holds Interest Rates Steady Amid Pressure
The US Federal Reserve has decided to maintain the current interest rates, ranging between 3.5% and 3.75%, despite continuous pressure from President Donald Trump for further reductions. This decision, made on Wednesday, comes amidst a criminal investigation into Federal Reserve Chair, Jerome H. Powell, and a Supreme Court case against sitting Fed governor, Lisa Cook.
Background and Context
The decision to hold rates steady was widely expected, despite the relentless attacks from the Trump administration, including a barrage of criticism and a criminal investigation against the Federal Reserve's chair. These attacks have led to concerns about the central bank's independence. The Federal Reserve has been reducing interest rates in the latter half of 2025, and the big question now is how long this pause will last.
Key Developments
The decision to hold interest rates steady was not unanimous. Two Fed governors opposed this move and instead backed a rate cut, while ten officials were in favor of maintaining the current rates. The board is still divided, remaining split between officials opposed to further cuts until inflation comes down and those who want to lower rates to further support hiring.
In a recent development, a Supreme Court case against Lisa Cook, a sitting Fed governor, was heard last week. This case, which questions President Trump's authority to remove Cook from the Federal Reserve’s Board of Governors, is considered as a potential legal threat to the Fed’s independence and the US economy. The case has drawn an extraordinary amicus brief from some of the most influential figures in US economic policy.
Implications and Reactions
This decision, along with the legal intrigue around it, comes at a pivotal moment for the central bank's independence. Jerome Powell warned of the far-reaching consequences this case could have on the central bank’s independence and the U.S. economy. This case is being regarded as perhaps the most important legal case in the Fed's 113-year history,
Powell told reporters.
The Federal Reserve, citing robust economic growth, has defied the mounting pressure for rate cuts from President Trump. He continues to insist on lower interest rates, despite the Fed's decision to hold the rates steady due to 'elevated' economic uncertainty.
Current Status and Conclusion
As of now, the Federal Reserve has decided to keep interest rates steady, awaiting more data on the world’s biggest economy. The Supreme Court is expected to issue a ruling on the Lisa Cook case by summer. Until then, the focus remains on how the Federal Reserve will navigate the ongoing economic uncertainty and political pressure, while maintaining its commitment to economic stability.