With a low-growth economy, rising gas prices and firms slowing down on hiring, the Federal Reserve yesterday took the decision to keep rates unchanged.

This is the third consecutive time it has done so.

 Federal Reserve Chair Jerome Powell and his governors voted to keep the benchmark rate between 3.5 per cent and 3.75 per cent. Powell pointed out that inflation remains above its 2 per cent long-term target.

President Trump has openly said he disapproves of Powell’s stewardship of the central bank and his unwillingness to lower the policy rate irks him.  He wants Powell replaced by hand-picked former Fed governor Kevin Warsh. Powell yesterday announced that he will remain on the Federal Reserve’s Board but is expected to step down as Chair on May 15th, 2026. Warsh was confirmed by the Senate Banking Committee on Wednesday.

Powell has made it clear the Federal Reserve is at risk amid legal assaults, adding, “ The institution is being battered over these things. We’re having to resort to the courts to enforce our …ability to make monetary policy without political considerations.”

Explaining the decision to keep rates the same, Powell said: “ A good part of the slowing pace of job growth over the past year reflects a decline in the growth of the labour force due to lower immigration and labour force participation.

“Though labour demand has clearly softened as well, other indicators, including job openings, layoffs, hiring and nominal wage growth, generally show little change in recent months. I think we’re pretty close to the neutral rate, which is likely somewhere within the 3 per cent to 4 per cent range. If we need to hike it, we will and if  we need to cut then we’ll signal the opposite.”

“We are very well aware that people are experiencing higher gas prices all over the country now, and that hurts. Those hikes may continue to happen. When gas prices go up, that’s disposable income coming out of people’s pockets. So they’re going to spend less on other things so there will be a hit to GDP.”