The U.S. Federal Reserve voted on Wednesday to keep interest rates unchanged, resisting mounting pressure from the White House to lower borrowing costs amid political and economic tensions.
The central bank said it would maintain its benchmark lending rate between 3.5% and 3.75%, noting that U.S. economic activity continues to expand at a steady pace, according to a report by the BBC.
Policymakers highlighted signs of stabilization in the labor market, with slower job creation but a declining unemployment rate. The Federal Reserve said it is still assessing the economic impact of three interest rate cuts implemented last year.
President Donald Trump is expected to announce a successor to Federal Reserve Chair Jerome Powell, whose term ends in May. Powell has been repeatedly criticized by Trump for not cutting interest rates quickly enough.
During the vote, two Federal Reserve officials supported a rate cut: Stephen Miran, currently on leave from his role at the White House where he leads Trump’s Council of Economic Advisers, and Christopher Waller, a Trump appointee widely seen as a potential successor to Powell.
Despite internal disagreement, the Fed emphasized improving economic indicators, stating that recent data gave policymakers confidence to keep rates stable. In its statement, the board said that job gains remain modest and unemployment shows signs of stabilization.
However, the decision comes against the backdrop of a recent federal criminal investigation that has intensified concerns over political pressure and the independence of the Federal Reserve. Earlier this month, federal prosecutors opened an investigation into Powell’s testimony before a Senate committee last year, related to renovations of Federal Reserve buildings.
Wall Street investors are closely watching Powell’s post-decision press conference, his first since news of the Justice Department investigation emerged. The S&P 500 index fluctuated ahead of his remarks, briefly surpassing the 7,000-point mark for the first time on Wednesday morning.
Powell has previously suggested that the investigation stems from Trump’s frustration over the Fed’s refusal to cut rates more aggressively. Former U.S. central bank leaders have strongly criticized the probe, calling it an attempt to undermine the Fed’s independence.
Trump has publicly urged Powell to lower interest rates to reduce government borrowing costs and ease access to mortgages and loans for Americans. He has also launched personal attacks against Powell, calling him a “major loser” and “stupid,” despite having appointed him during his first term.
Last August, Trump announced the dismissal of Federal Reserve Governor Lisa Cook, accusing her of mortgage fraud—claims she has denied. The U.S. Supreme Court is currently reviewing the case, with justices from across the ideological spectrum expressing concern over the broader implications for central bank independence and economic stability.
Another major uncertainty facing markets is Trump’s eventual choice to replace Powell, with analysts warning that any successor will face credibility challenges amid fears of political interference.
In recent days, BlackRock executive Rick Rieder has emerged as a leading candidate for the position, according to market observers.
