Khaberni - The Federal Reserve (US central bank) kept the interest rate unchanged on Wednesday, in line with expectations, as the Federal Open Market Committee set the overnight lending rate in a range between 3.5% and 3.75%.
The markets had been expecting the "Federal" to ignore repeated calls by US President Donald Trump for a rate cut after three consecutive quarter-point cuts during 2025.
The purpose of the interest rate cuts made by the central bank last year was to support the economy and prevent a sharp deterioration in the job market after a significant slowdown in employment following comprehensive tariffs imposed by President Donald Trump on almost all American imports in April.
However, there are indications that the unemployment rate is stabilizing and the economy may rebound. Meanwhile, inflation remains much higher than the Federal Reserve's target of 2%.
One of the key issues that Federal Reserve Chairman, Jerome Powell, is likely to address in his press conference shortly, is the duration the Council will maintain its current monetary policy.
The interest rate decision committee remains divided between officials who oppose further cuts until inflation decreases, and others who favor cutting interest rates to further support employment. In December, only 12 out of 19 members at the committee meetings supported at least one interest rate cut this year.
Most economists expect the Council to cut interest rates twice this year, likely at the meeting in June or thereafter.
This week's meeting of Federal Reserve officials comes under unprecedented pressure from the Trump administration.
Powell said on January 11 that the Council received subpoenas from the Department of Justice as part of a criminal investigation concerning his testimony before Congress about a restoration project of a Federal building costing $2.5 billion.
In an unusually candid recorded statement, Powell said the subpoenas were an excuse to punish the Federal Reserve for not reducing interest rates more quickly.
Last week, the Supreme Court looked into Trump’s attempt last year to remove Lisa Cook, a governor at the Federal Reserve, over allegations of real estate fraud, which she denies. No president has ever removed a governor in the 112-year history of the Council. It seemed during the oral argument session that the judges were inclined to allow her to remain in her position until the case is decided.
Meanwhile, Trump hinted that he is close to appointing a new chairman of the Federal Reserve to replace Powell when his term ends in May. The announcement may be made as early as this week, although it has been postponed previously.
Economic experts say that the president's efforts to pressure the Federal Reserve may have backfired, as Republicans in the Senate expressed their support for Powell and threatened to block Trump’s nominee to succeed Powell.
