On 29/4, following a two-day policy meeting, the Fed decided to keep its benchmark interest rate at 3,5-3,75%. This move mirrored decisions made in its January and March meetings. Last year, the central bank reduced rates ba times.
"Inflation is accelerating, partly reflecting the recent surge in global energy prices. Developments in the Middle East are contributing to a high degree of uncertainty for the economic outlook," the Fed stated in its post-meeting announcement. The central bank's phrasing differed from the previous meeting, omitting a qualifier when describing accelerating inflation.
The meeting occurred amidst rising oil prices due to the conflict in the Middle East over the past two months, escalating inflation risks. The US is blockading Iranian seaports, while Iran is preventing other vessels from transiting the Strait of Hormuz, a crucial shipping lane for the global energy market.
Brent crude oil prices have risen approximately 50% since the start of the conflict. The increase in gasoline and energy prices last month also contributed to the US March consumer price index (cpi) seeing its sharpest rise in nearly 4 years. This could make the Fed more reluctant to cut interest rates.
Investors currently anticipate the Fed will likely not reduce interest rates before mid-next year.
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Fed Chairman Jerome Powell during a March 2026 press conference. Photo: Reuters |
Furthermore, this meeting could mark Jerome Powell's last as Fed Chairman. On 29/4, Kevin Warsh, nominated by US President Donald Trump for the next Fed Chairman term, was approved by a vote in the US Senate Banking Committee. Senator Thom Tillis backed Warsh after the US Department of Justice canceled its criminal investigation into Powell, which had previously been Warsh's most significant hurdle.
The nomination will next proceed to the full US Senate for approval. Senators could vote as early as two weeks. If the outcome remains unchanged, Warsh could assume the role of Fed Chairman after Powell's term concludes on 15/5. The next Fed meeting is scheduled for June.
Ha Thu (according to Reuters)
