The Federal Reserve continued to hold its benchmark interest rate steady on Wednesday, maintaining a cautious stance following the conclusion of what is widely expected to be Jerome Powell’s final FOMC meeting as chair.
The Federal Open Market Committee kept the central bank’s benchmark rate pinned at a target range of 3.5% to 3.75%, marking the third time this year that the group has hit the brakes on policy shifts as conflict in the Middle East threatens the global economy.
"Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook," the Fed said in a statement.
Earlier in the day, the Senate Banking Committee advanced Kevin Warsh’s nomination to succeed Powell, whose eight-year tenure at the Fed’s helm expires next month. The procedural vote sent Warsh’s nomination to the full Senate, where Republicans hold a majority.
Powell has indicated that he would serve as “chair pro tempore” if Warsh isn’t confirmed by May 15, aiming to maintain an orderly transition for the leadership position. Powell has also said that he may continue to serve as a Fed governor to ensure institutional stability.
During the FOMC's latest meeting, Fed Governor Stephen Miran called for a 25 basis-point rate cut. The Fed’s previous interest-rate decision was also split, with Miran advocating for a cut. Three Fed governors supported the decision to stand pat, but they did not endorse the inclusion of language that pointed to an easing bias.
With ships continuing to struggle to transit the Strait of Hormuz, through which 20% of the world’s oil flows, U.S. energy costs have climbed higher, potentially complicating the Fed’s efforts to deliver inflation back to its 2% target.
