Four key takeaways from Jerome Powell's last rate decision as Fed chair

The Federal Reserve has held US interest rates steady after what was expected to be Jerome Powell's last meeting as chair.

Hours after his successor Kevin Warsh won the backing of a key Senate committee to take up the role next month, Powell announced the Fed's rate would stay between 3.5% and 3.75%.

It followed continued pressure from US President Donald Trump on the Fed to lower interest rates, with the Trump having criticised Powell throughout his presidency.

Warsh is expected to face the same pressure from the president, but has vowed to uphold the central bank's independence when he takes over from Powell.

After the bank's latest decision on Wednesday, Powell gave a press conference covering topics from the US-Israel war with Iran to Trump's attacks on the Fed. Here are the four key takeaways from a significant day for the future of the US central bank.

Interest rates held as Iran war uncertainty looms

The Fed kept up its 'wait and see' approach to the economic uncertainty sparked by the Iran war.

The conflict has pushed up energy costs and is also feeding through to higher prices at the pump and more expensive grocery bills.

Against that backdrop, the Fed decided it was best to keep interest rates steady as it waits for clarity on how long the conflict will last – and how bad the fallout becomes.

Hopes of any imminent rate cuts were dashed when it was revealed March's inflation figure had shot up to 3.3%, the highest it has been since May 2024, but the Federal Reserve's statement suggested it would cut rates when it next meets.

However, Samuel Tombs, chief US economist at Pantheon Macroeconomics, said Wednesday's fresh oil price bounce, spurred by expectations the US will maintain its blockade of Iranian ports for the long haul, could see rate cuts delayed until 2026.

Central banks tend to cut rates when inflation is high to discourage people from spending and encourage them to save, something they hope will bring the rate of price rises down. They then tend to cut interest rates when the economy is weak to encourage spending and investing to boost job creation and economic growth.

Powell to remain as Fed governor until probe 'well and truly over'

Though this is expected to be Powell's last meeting as chair, his term as a Fed governor does not expire until 2028.

He said he will stay on at the bank until a Trump administration probe into him and the bank is "well and truly over".

US attorney for the District of Columbia Jeanine Pirro said the investigation would be closed, but Powell said he believed she would "not hesitate to restart the investigation".

"I've said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that," he added.

The move will disappoint the US president, who has frequently clashed with Powell.

Powell remaining on the Fed board could lead to extra scrutiny of decisions taken and statements made by Warsh going forward, but Powell promised to keep "a low profile" and said acting as a de facto "shadow chair" is "something I would never do".

Legal attacks are 'battering' the Fed

Powell warned the Trump administration's "legal assaults" are much more serious than simply verbally criticising the Federal Reserve.

The outgoing chair said legal actions by the Trump administration are "battering the institution and putting at risk the thing that really matters to the public".

"Which is the ability to conduct monetary policy without taking into consideration political factors," he said.

He added the administration's legal attacks on him "are unprecedented in our 113-year history, and there are ongoing threats of additional such actions".

Warsh confirmation now a formality

After the US Justice Department said it had dropped the probe into Powell, top Republican Senator Thom Tillis dropped his effective block on Warsh's appointment.

He was threatening to stall the former Fed governor's appointment, but on Wednesday fell in line with other Republicans on the Senate Banking Committee to wave his appointment through.

Warsh now faces a vote of the full Senate as the final hurdle in his confirmation, but as Republicans control the Senate this appears to be a formality. The only question remaining is whether his confirmation will come in time for the end of Powell's term on 15 May.

On Wednesday, Powell congratulated his successor and wished him well with his confirmation.