Fed holds rates steady as Powell approaches end of Fed chair tenure

The Federal Reserve held interest rates steady Wednesday, leaving markets with a widely expected pause while traders turned their attention to Chair Jerome Powell’s possible final FOMC press conference.

The Federal Open Market Committee kept the federal funds rate target range at 3.5% to 3.75%, saying recent indicators suggest economic activity has continued to expand at a solid pace. The Fed said job gains have remained low on average, unemployment has been little changed in recent months, and inflation remains elevated, partly reflecting the recent increase in global energy prices.

Bitcoin was trading near $76,000 at press time, trading flat on the day, while major US stock indexes were slightly lower. The muted reaction reflected a market that had already priced in no rate change before the announcement.

The statement also sharpened its focus on geopolitical risk, saying developments in the Middle East are contributing to a high level of uncertainty around the economic outlook. Policymakers said they remain attentive to risks on both sides of the Fed’s dual mandate of maximum employment and 2% inflation.

Powell’s remarks are now the main focus for traders watching for signals on inflation, unemployment, energy driven price pressures, and the Fed’s next policy steps. His comments carry added weight because this could be his final FOMC meeting as chair, with markets also watching how he addresses the leadership transition and his outlook for the central bank after his departure.

The leadership transition is also moving into focus after the Senate Banking Committee voted Wednesday to advance Kevin Warsh’s nomination to replace Powell as Fed chair. Warsh’s nomination now heads toward a full Senate vote, adding another layer of uncertainty for markets already weighing the Fed’s rate path, inflation risks, and signs of cooling in the labor market.

The vote showed a broader split inside the committee. Stephen Miran opposed the decision because he preferred a 25 basis point rate cut, while Beth Hammack, Neel Kashkari, and Lorie Logan supported keeping rates unchanged but objected to including an easing bias in the statement.

The Fed said it will continue assessing incoming data, the evolving outlook, and the balance of risks before deciding on further policy adjustments. The committee added that it remains strongly committed to supporting maximum employment and returning inflation to its 2% target.