Today, the Federal Reserve Open Market Committee kept its policy rate in a range of 3.5 per cent to 3.75 per cent, the same as it was in December of last year.

This decision will irk the President of the United States, who has continually urged the Fed Chair Jerome Powell to bring down rates.

With inflation remaining elevated, an unflattering jobs report, and now the war in the Middle East it was perhaps prudent to keep the status quo for now and watch how things develop over the coming months.

Today, oil prices went up to $108 a barrel, and gas prices in  America are now averaging $3.84 per gallon at the pump.

Explaining the Federal Reserve’s decision to keep its rates the same, Jerome Powell said: “ The implications of developments in the Middle East for the U.S. economy are uncertain. Near term measures of inflation expectation have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East.

“ Higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy.”

The Federal Reserve now estimates core inflation at 2.7 per cent by the end of the year with GDP rising by 2.4 per cent. As it now stands, the unemployment rate in America is 4.4 per cent.

Powell continued: “ We’re well aware of the performance of inflation over the last few years and how a series of shocks have interrupted progress that we’ve made over time. The main thing we are looking for is whether tariff price pressures are moving through the system and are one-time effects. We’re looking for progress on that.

“The U.S. economy is doing pretty well, it’s just we don’t know what the effects of this will be and really no one does.”

The only vote against keeping rates unchanged was Stephen Miran, a Trump appointee who wanted to see rates come down by 0.25 per cent.

The Summary of Economic Projections is expecting one benchmark interest rate cut in 2026 and another in 2027. 

Last year, the Fed cut rates three times -in September, October and December.

President Trump and Federal Reserve Chair Jerome Powell have had an incendiary relationship, with the President questioning the head of the central bank’s abilities and continually calling on him to lower interest rates.

Trump has called Powell “ incompetent” and has called for a criminal investigation of the Federal Reserve Chair. He wants to see the back of him, the sooner the better.

For his part, Powell insists that the Federal Reserve should remain independent and its operations not determined by a sitting President.

On this matter, Powell said: “ Independence is what allows us to do our jobs, and stable prices is half of our mandate, it’s one of our two mandates – maximum employment being the other. Look at every advanced economy that looks anything like the U.S. anywhere in the world, in a market economy, in a democracy and you’ll see central bank independence. It looks a lot like, and in some cases, stronger than what we have.

“It’s critical that we have that so that we can do the things that we need to do to preserve price stability. And it’s just an accepted standard practice and I think has a lot of support, certainly in Congress where our oversight is.”