Powell hints at extended pause on rate cuts but stays mum on Trump attacks

Washington (CNN) — The Federal Reserve on Wednesday kept interest rates unchanged as the central bank fights to maintain its ability to set interest rates without political interference.

Officials kept their benchmark lending rate at a range of 3.5-3.75%, following three consecutive rate cuts late last year. It’s a pause that may persist for some time, Chair Jerome Powell hinted in his post-meeting news conference.

The Fed chief was less forthcoming about his clash with the White House, which he addressed earlier this month head-on in his stunning video calling out President Donald Trump.

The decision to stand pat wasn’t unanimous, with Fed governors Stephen Miran and Christopher Waller – both appointed by Trump – casting dissenting votes in favor of a quarter-point cut. Waller is one of the four contenders for Fed chair after Powell’s term ends in May. In the past, Waller’s dissents backing lower rates have been seen favorably by the Trump administration.

Powell on the ‘solid’ economic outlook

President Donald Trump said this week he intends to announce his Fed chair nominee “pretty soon.” The long-awaited decision will cap off a monthslong search process that at one point considered about a dozen candidates for the most influential role in global finance.

Trump’s Fed chair pick is perhaps the most pressing question for Wall Street, since Powell has just two meetings left and markets aren’t pricing in a rate cut until the summer.

But Powell gave a sense of where the committee broadly stands on the outlook for monetary policy, suggesting there’s no need for imminent rate cuts.

“I think, and many of my colleagues think, it is hard to look at the incoming data and say that policy is significantly restrictive at this time,” Powell told reporters. In other words, it doesn’t make sense to be lowering rates right now because the economy seems to be holding up.

The Fed’s latest policy statement essentially argued for the latest pause by describing economic growth as “solid,” which is an improvement from when it was called “moderate” in December’s statement. Officials also wrote that the unemployment rate has shown “some signs of stabilization.”

Last year, the Fed lowered rates because there were signs of a weakening labor market, and central bankers want to prevent a possible deterioration.

Powell’s advice for the next Fed chair

Wall Street expects two cuts in 2026 — and a big reason for that is because the Fed’s next leader will be attuned to lowering rates.

“There isn’t a clear case to cut this year, but we know that the next Fed chair is going to come in leaning dovish, so there’s a decent chance they could get enough folks on the committee to be on board with a couple of cuts,” Aditya Bhave, senior US economist at Bank of America, told CNN. “But it will be hard for that person to build a consensus.”

The new leader of the central bank will preside over a divided, 12-person rate-setting committee that doesn’t just blindly go along with whatever course of action the chair proposes. This year, there are new voices on the committee who’ve said they’re still concerned about inflation, such as Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan.

“It’s not a committee of one, it’s a committee of many, and many have to decide that there is economic justification for cutting rates,” said Tom Porcelli, Wells Fargo’s chief economist.

Powell’s advice to his successor in response to a question posed by CNN’s Matt Egan: “Stay out of elected politics.”

“Our window into democratic accountability is Congress, and it is not a passive burden for us to go to Congress and talk to people,” he said. “It is an affirmative, regular obligation. You earn it with the elected overseers, so it is something you need to work hard at, and I have worked hard at it.”

Powell restates the importance of Fed independence

Powell rejected several questions from reporters on the federal probe and anything having to do with politics — essentially defaulting to his playbook of remaining neutral.

But he did back up his reasoning for attending this month’s oral arguments in the case of Fed Governor Lisa Cook, who is challenging Trump’s attempt to remove her from her post on the central bank’s powerful Board over unproven allegations of mortgage fraud.

“I thought it might be hard to explain why I didn’t attend,” Powell said. “In addition, (Former Fed Chair) Paul Volcker went to a Supreme Court case famously in 1985 or so, so it is precedented, I thought it was an appropriate thing.”

A ruling against Cook would be widely seen as a fatal blow to the Fed’s political independence, which Powell again defended in his latest comments, saying it has “served the people well.”

But the conservative Justices on the nation’s highest court seemed skeptical of the administration’s arguments for firing Cook and wanting to keep her out of her post while the litigation plays out.

That included Justice Brett Kavanaugh, Trump’s second nominee to the high court. He warned that future presidents could loosely define a “cause” to fire Fed officials they disagree with, if the Trump v. Cook case sets that precedent.

“What goes around comes around,” Kavanaugh told US Solicitor General D. John Sauer, pointing out how a future Democratic president could use “trivial or inconsequential or old allegations that are very difficult to disprove” to push out Trump appointees.

“Once these tools are unleashed,” Kavanaugh said, “they’re used by both sides.”

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.