Prosecutors from Jeanine Pirro's office attempted an unannounced visit to the Federal Reserve's renovation site but were denied access amid a criminal investigation into Fed Chair Jerome Powell. The probe and visit have complicated the confirmation of President Trump's nominee to succeed Powell.
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Federal Reserve Holds Interest Rates Steady Amid Middle East Conflict and Rising Inflation Pressures
Federal Reserve Holds Interest Rates Steady Amid Middle East Conflict and Rising Inflation Pressures
The Federal Reserve announced it will keep its benchmark interest rate steady at 3.5% to 3.75%, marking a second consecutive pause amid economic uncertainty driven by geopolitical tensions in the Middle East. Rising energy prices due to the conflict between the U.S., Israel, and Iran have intensified inflationary pressures, while recent economic data showed unexpected job losses and higher wholesale inflation. Federal Reserve Chair Jerome Powell is expected to provide further guidance on monetary policy amid these challenges, with potential rate cuts later in 2026 remaining uncertain.
US economic strength was demonstrated in January, as the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, rose 5.4% from a year earlier and 0.6% from December to January. Consumer spending also increased 1.8% from December, though goods prices declined 0.7%. The Core PCE index rose 0.2% from December to January, indicating that inflation remains entrenched in the US economy and the Fed is likely to keep raising interest rates.
The U.S. economy showed strength in the fourth quarter of 2022, with GDP growth of 2.9% and an impressive 517,000 jobs added in January. The leisure and hospitality sector led payroll gains, with 128,000 jobs, followed by professional and business services and health care. The strong job growth could raise doubts about inflation easing further, as employers' steady demand for labor has contributed to high inflation.
The Federal Reserve has raised its benchmark interest rate for the eighth consecutive time in an effort to subdue inflation. This brings the federal funds rate to its highest level since late 2007, and Fed chair Jerome Powell has indicated that more rate hikes are on the way. Investors have responded positively to the news, with the Dow and other major indexes climbing steadily since the announcement.