The US Federal Reserve has left its benchmark interest rate unchanged for the third straight meeting as policymakers grappled with the policy impact of persistent inflation and awaited a looming leadership transition at the central bank.

 

In what may have been Chair Jerome Powell’s final meeting at the helm, the rate-setting Federal Open Market Committee (FOMC) voted to hold the benchmark funds rate in a range between 3.5% and 3.75%. The Federal Reserve has said that developments in the Middle East are adding to high uncertainty over the economic outlook. In a statement after its two-day meeting, the Fed added that inflation remains elevated, partly due to a recent rise in global energy prices. 

 

Meanwhile, during a news conference following the central bank’s decision, Powell signalled that he would remain on the Board of Governors for an indefinite period after his term as chair ends on May 15. He said he is waiting until an investigation into the Federal Reserve’s renovations is well and truly over with transparency. He can remain as a governor until 2028. 

 

Since returning to power last year, US President Donald Trump has repeatedly criticised Federal Reserve Chair Jerome Powell for not cutting interest rates faster, a move that could boost economic activity but also risk higher inflation. Powell is set to be succeeded by Kevin Warsh, whose nomination to lead the Federal Reserve has been cleared by the Senate Banking Committee. His confirmation by the full Senate is expected before Powell’s term ends on May 15.