Fed Keeps Policy Rates Unchanged, Powell Remains Firm

The U.S. central bank, the Federal Reserve, has kept its policy interest rate unchanged, reaffirming its independence under Chairman Jerome Powell. Despite political pressure from President Donald Trump, Powell resisted calls to lower rates further.

In 2025, the Fed cut interest rates three times as the economy returned to normalcy, but Trump remained dissatisfied, urging deeper reductions. Powell, however, remained steadfast, emphasizing the importance of central bank autonomy to maintain credibility.

The Fed announced that the policy rate will remain between 3.5% and 3.75%, describing the U.S. economic expansion as “stable.” Powell stressed that monetary policy should not be influenced by political interests and highlighted the necessity of an independent central bank for long-term public trust.

Earlier concerns over inflation and employment persist, but recent data shows the labor market stabilizing and inflation moderating. The S&P 500 briefly hit 7,000 points before retreating.

Two Fed officials voted for a rate cut, including Trump-appointed members Stephen Moore and Christopher Waller, fueling speculation that Waller could succeed Powell as chairman when his term ends in May.

Analysts say 2026 could see one or two rate cuts, depending on the new Fed leadership. However, Bank of America senior economist Aditya Bhavi cautioned that strong justification for further cuts is currently limited.