Powell bids farewell to the Fed presidency by keeping interest rates unchanged against Trump's pressures

WashingtonThe Chairman of the Federal Reserve (Fed), Jerome Powell, has bid farewell to his position at the helm of the institution, keeping interest rates around 3.5% and 3.75%. The US central bank freezes the price of money for the second consecutive time since the Iran war began. Powell will leave the presidency on May 15th in a moment of maximum turmoil at the bank, although he has already indicated that he will continue to serve as governor. Although he has assured that he intends to maintain a "low profile," and that he does not want to be a "dissenter," the decision is a challenge to Donald Trump. In his campaign of pressure, the magnate threatened to remove him from the institution once his presidency ended. Something that is not legally permitted.

Powell leaves the bank's leadership firm in his principles of independence and without yielding to Trump's pressures, which he has warned about. "I think [the Fed's independence] is at risk, just looking at the legal assaults it has suffered," he stated, referring both to the case that the Justice Department opened against him and the president's attempt to unilaterally dismiss Governor Lisa Cook, a case on which the Supreme Court must still rule. "But this is not over yet, and it is very important," he added.

Although he confirms that he will leave the presidency on May 15th, Powell is not considering the dispute with Trump over. The economist still has his position as governor guaranteed until January 2028. "I will leave when it is appropriate," he told the press and highlighted the US president's persecution against him as one of the main reasons. The Justice Department opened a criminal investigation against Powell for allegedly offering false testimony before Congress on the central bank's building reforms. Last month, a judge dismissed the accusations from Trump's ministry, and this weekend the administration renounced continuing to pursue Powell in this case. However, it was not for a legal reason.

The decision by which Justice has resigned from continuing with the case is because Republican Senator Thomas Tillis had been blocking the progress of the vote to confirm Trump's nominee, Kevin Warsh, as the new chairman of the Fed. After the department abandoned the case over the weekend, this Wednesday morning Tillis unblocked the vote in the Senate committee to advance the confirmation of Warsh. Now, the Senate has two weeks to conduct the procedural scrutiny and officially appoint him as chairman.

Powell has cited the department's decision to abandon the case, but has been wary of the Trump administration's word. "I have said that I will not leave the board until this investigation is completely finished, with transparency and finality, and I stand by that position. Recent events encourage me, and I am carefully watching the remaining steps of this process," he stated.

The decision is once again a challenge to Trump, who threatened to fire him from the central bank if he remained in the institution past May 15. Initially, there was a possibility that if Warsh got stuck in the Senate and was not confirmed before that moment, Powell would have to continue leading the bank. A fact on which the president had not wanted to comment. The question now is what the president's reaction will be.

A division not seen in decades

Today's vote, eight in favor and four against, is one of the most divided seen on the board of governors in at least two decades. Stephen Miran, the governor recently appointed by Trump, wanted a 0.25-point cut. It has been more than three decades since such division was seen on the board of governors. The result is also a reflection of the pressure campaign that the US president is exerting against the bank to try to interfere and force an interest rate cut.

In a sort of legacy before the new president appointed by Trump arrives, Powell has wanted to emphasize the idea that the entire clash with the president is not a matter of egos but of public interest. "This is not about the people who work at the Fed or in institutions, this is about the benefits of a central bank that makes decisions based on analysis and our best reasoning, rather than just trying to hurt politicians," he stressed.

In its written decision, the US central bank notes how inflation remains high due to the conflict in the Middle East and how the decision to freeze rates continues to respond to uncertainty in the fuel market. Today, the barrel of crude oil reached $119, after the Wall Street Journal published that the White House is preparing for a possible long-term blockade in Hormuz.