Fed holds rates steady in Jerome Powell’s last meeting as chairman

The Federal Reserve decided to hold interest rates steady on Wednesday in what was likely Jerome Powell’s last session as chair.

The Federal Open Market Committee kept its benchmark rate at 3.5%-3.75% as it worked to satisfy its dual mandate of stable prices and maximum employment.

“Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook. The committee is attentive to the risks to both sides of its dual mandate,” the committee said in a written statement. “In support of its goals, the Committee decided to maintain the target range for the federal funds rate.”

Mr. Powell said economic growth remains robust and consumer spending has been resilient.

He has served as chair since 2018, but his term ends May 15.

President Trump’s pick to replace Mr. Powell, former Fed official Kevin Warsh, is on track for confirmation after the Senate Banking Committee advanced his nomination in a 13-to-11 vote along party lines on Wednesday.

Sen. Thom Tillis, North Carolina Republican, had pledged to block Mr. Warsh’s nomination until a criminal probe into Mr. Powell and a renovation project at the central bank’s headquarters in Washington was resolved.

The senator and other Republicans were skeptical that Mr. Powell had done anything wrong, and a federal judge said the probe appeared to be a pretext for Mr. Trump to harass the chair over interest rates.

Mr. Tillis dropped his opposition to Mr. Warsh after the Trump administration transferred the Powell investigation from the criminal realm to the Fed’s inspector general’s office.

Mr. Powell is entitled to serve as a Fed governor for up to two more years, even though he will no longer be chair. He said he plans to remain on the board until the legal situation around the Fed project is truly over. 

“I plan to keep a low profile as a governor,” Mr. Powell said. “There is only ever one chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that chair. I will leave when I think it is appropriate to do so.”

He rejected the idea that he is making a political move by occupying a seat that Mr. Trump could fill with a pick. He said the administration’s actions left him “no choice” but to protect the Fed’s independence.

Mr. Trump is eager to reshape the Fed to his liking. For months, the president hectored Mr. Powell as “too late” when it came to lowering borrowing costs.

The president said lower rates would jumpstart the economy, though the Fed was fearful that Mr. Trump’s tariffs would cause price inflation.

The Fed lowered rates in three successive meetings in late 2025, citing a sluggish labor market, but it has not been enough to satisfy Mr. Trump.

“It’s a good time to lower [rates],” Mr. Trump said. “We’re right now having investments made in our country that no one’s ever seen.”

Stephen Miran, a Trump appointee, was the only member of the Open Market Committee to vote Wednesday in favor of cutting rates to 3.25%-3.5%.

Republicans say Mr. Warsh is a battle-tested former Fed official who will help the economy.

“It is incredibly important that we break the bind of ’Bidenomics’ on households across this nation,” said Senate Banking Committee Chairman Tim Scott, South Carolina Republican.

Democrats worry that Mr. Warsh will be a “sock puppet” who does Mr. Trump’s bidding.

Sen. Elizabeth Warren, Massachusetts Democrat, said Mr. Warsh’s nomination would “bring the president one step closer to completing his illegal attempt to seize control of the Fed and artificially juice the economy.”

Mr. Powell congratulated Mr. Warsh on the advancement of his nomination, calling it an “important step forward.”