Fed keeps rates unchanged in Powell’s last meeting as Chair.
Oil surge and geopolitical risks drive a wait-and-watch stance.
Fed officials split on rate path amid rising inflation concerns.
The US Federal Open Market Committee (FOMC) held the benchmark Fed funds target range unchanged at 3.75–3.50% at its April meeting. Fed policymakers remain divided on the rate decision, as the vote reflected an 8–4 split—an unusual divide among Fed governors.
The meeting also marked US Federal Reserve Chair Jerome Powell’s last Fed meeting as Chair before he exits next month.
1 April 2026
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Kevin Warsh, who will take over as Fed Chair, is expected to face similar pressure from US President Donald Trump to lower interest rates amid rising expectations of inflation and fears of slowing economic growth.
Iran War Uncertainty Looms
At the post-meeting press conference, Powell stated that the Fed decided to hold interest rates steady as it is adopting a ‘wait-and-watch’ approach to the evolving geopolitical situation and increasing economic uncertainty.
The conflict, which is entering its second month, has triggered widespread supply chain disruptions and has sent Brent crude prices above $120 per barrel, the highest level since 2022.
Against this background, global central banks are awaiting further clarity on the longevity of the war and its possible economic impact before making any moves on interest rates.
The US Fed was earlier expected to reduce interest rates by 25 basis points in 2026. However, analysts and market participants now expect the Fed to hike interest rates by a similar quantum next year, despite mounting political pressure.
The surge in crude oil prices has also heightened fears of rising inflation. US inflation rose to 3.3% in March, the highest since May 2024.
When inflation rises, central banks typically raise interest rates to contain it. The US Fed has a dual mandate to control inflation and maintain low unemployment, with a target inflation rate of 2%.
Powell to Remain on Board of Governors
Though it was his last meeting as Fed Chair, Powell also signalled that he will continue to serve on the Board of Governors for an indefinite period. His term as a Fed governor expires in 2028.
He said he will stay until the probe initiated by the Trump administration is “well and truly over.”
Trump and Powell have had major clashes, with the administration dissatisfied with his interest rate decisions.
Trump accused Powell of improper cost overruns in the renovation of the Fed’s building, which led to an investigation. Trump has also frequently resorted to personal attacks, including calling Powell a “numbskull.”
Responding to Trump’s criticism, Powell said the remarks are “unprecedented in our 113-year history” and added that he worries about the impact on the Fed as an institution.
Signing off, Powell added, “Thank you very much, everyone—and I won’t see you next time.”
