Powell defends the Fed's independence and does not lower interest rates.

WashingtonAfter three consecutive rate cuts by the end of 2025, the Fed has decided this time to freeze interest rates, having set them around 3.5% to 3.75%. Beyond addressing economic concerns, the decision is also a symbolic gesture of the Federal Reserve's commitment to maintaining its independence despite pressure from Donald Trump. harassment campaign To force the central bank to lower interest rates even further, the president has succeeded in getting his Justice Department to open a criminal investigation against Fed Chairman Jerome Powell.

"We believe the current guidance of monetary policy is appropriate to support progress toward our goals of maximum employment and 2% inflation," Powell said during the press conference following the decision, where he highlighted the effect of Trump's tariffs on the rising cost of living. "Estimates based on the Consumer Price Index indicate that total PCE prices rose 2.9% in the twelve months through December, and that, excluding volatile food and energy categories, core PCE prices rose 3%. These elevated figures reflect inflation in the sector."

Powell believes the US economy has started 2026 on a "strong footing" with a stabilized unemployment rate after months of worrying data. Even so, the Fed chairman pointed out that hiring is slow and inflation remains high (around 2.7%). Powell also highlighted that both labor demand and supply have cooled compared to last year. Monetary policymakers are walking a tightrope, not wanting to jeopardize the labor market with excessively high interest rates for too long, but also not wanting to stop stimulating the economy to eliminate any lingering price pressures.

The only two governors who voted against the decision were J. Waller and Stephen Miran, who preferred a quarter-point cut. Miran, a former economic advisor to the president and one of the main proponents of the rate cut, was appointed Fed governor by Trump following a vacancy last year.

"We haven't lost confidence"

Despite declining to discuss political matters and the criminal investigation Trump has launched against him, Powell did defend the Fed's independence. The Federal Reserve Chairman reiterated the danger of monetary policy being used for political gain during an election campaign. "And I'm not talking about the US," Powell clarified, despite the weight of the current context. "If people stop trusting that decisions are made with the general interest in mind, and not to favor certain groups, regaining that trust will be very difficult. For now, we haven't lost it, and I don't think we will, but it's a key element that must be preserved," he argued.

Wednesday's vote on interest rates also comes after Fed Governor Lisa Cook was forced to defend her ability to remain in office after Trump tried to remove her last year. Although the Supreme Court has not yet issued a final decision, several justices at last week's hearing appeared hesitant about the Fed's ability to operate free from political interference had Cook's dismissal been upheld. Powell attended Cook's hearing before the high court, a move that Treasury Secretary Scott Bessent criticized as a "political" gesture. The Fed chairman has declined to respond to Bessent. "Furthermore, Paul Volcker attended the famous Supreme Court case, I believe around 1985. And I thought it was appropriate to do so," Powell responded, referring to then-Fed Chairman Paul Volcker in a legal case against the Fed's Board of Governors. Powell has declined to answer any further questions related to the administration's criminal investigation against him or what he will do after his term as Federal Reserve chairman ends in May, as his governorship does not expire until 2028.