US Fed holds interest rates steady, defying Trump pressure

The U.S. Federal Reserve held interest rates steady at its first policy gathering this year, citing robust economic growth, as the central bank resists President Donald Trump's mounting pressure for cuts.

Trump has sharply escalated his targeting of the Fed since returning to the White House, seeking to oust a key official among its leadership in what Chairman Jerome Powell said could be the "most important legal case" in the institution's long history.

But on Wednesday, the Fed voted 10-2 to maintain rates at a range between 3.50 percent and 3.75 percent, an outcome that was widely expected as officials await more data on the world's biggest economy.

In a statement, policymakers flagged that economic activity was "expanding at a solid pace," while the unemployment rate showed some "signs of stabilization."

But the rate-setting Federal Open Market Committee saw two dissents.

Fed governors Stephen Miran and Christopher Waller -- the latter is seen as a potential candidate to succeed Powell -- both backed a quarter-percentage-point rate cut instead.

The Fed has made quarter-point cuts at its last three policy meetings, as officials worried about the cooling jobs market.

Miran, who was recently appointed by Trump for a term ending this month, pushed for larger reductions each time.

But solid GDP growth, relatively steady unemployment, and stubborn inflation have provided reasons to pause cuts, putting officials again at odds with Trump, who has repeatedly urged for lower interest rates.

Policymakers have warned that Trump's actions could threaten the bank's independence from politics.

Powell stressed at a press briefing on Wednesday, however, that he did not believe the bank would lose its independence.

The president has been seeking to oust Fed Governor Lisa Cook over mortgage fraud allegations, while his administration launched an investigation into Powell over the bank's headquarters renovation.

In a rare rebuke this month, Powell criticized the threat of criminal charges against him, saying this was about whether monetary policy would be "directed by political pressure or intimidation."

He did not elaborate on the probe.

AFP