The US Federal Reserve has opted to keep interest rates steady at a range of 3.5% to 3.75%, resisting significant pressure from the Trump administration to lower them. This decision comes as the Fed faces scrutiny over its independence, with Chair Jerome Powell under a criminal investigation related to his congressional testimony on renovations at the central bank's headquarters.

Central Bank Independence Under Scrutiny

Jerome Powell has been a focal point of President Donald Trump's criticism, who has repeatedly urged for faster rate cuts, arguing that the current rates are detrimental to the US economy. Powell, however, has defended the Fed's autonomy, stating that losing independence would undermine the institution's credibility. "It's just an institutional arrangement that has served the people well," Powell remarked, emphasizing the need for monetary policy to remain free from political influence.

Economic Indicators and Policy Decisions

The Federal Open Market Committee (FOMC) voted to pause further rate cuts, highlighting recent economic improvements and a stabilizing job market. Powell noted that while job creation remains sluggish, unemployment rates have decreased, and inflation concerns have lessened. "The economy has once again surprised us with its strength," Powell commented, reinforcing the decision to hold rates steady.

Political Tensions and Future Leadership

Despite the Fed's stance, Trump has continued to express dissatisfaction, labeling Powell as "stiff" and suggesting that rate cuts should have been more aggressive. The criminal investigation into Powell's testimony, which he describes as a "pretext," has drawn criticism from former Fed officials and business leaders who view it as an attempt to undermine the central bank's independence.

As Powell's term as Fed Chair concludes in May, speculation mounts over his successor, with Trump expected to announce a replacement soon. Among the contenders is Christopher Waller, a current Fed official and Trump appointee.