The Federal Reserve kept its benchmark interest rate at 3.5–3.75 percent at what is expected to be Jerome Powell's final meeting as chair, with Powell saying he will not leave the board until legal challenges posed by the Trump administration are resolved.

Rates unchanged amid economic pressures

The Federal Reserve held its benchmark interest rate steady at 3.5–3.75 percent, the central bank announced following what is expected to be Jerome Powell's final meeting presiding as chair, a decision taken against a backdrop of persistent inflation concerns and global economic strain.

Powell refuses to walk away

Powell said he will not leave the Federal Reserve Board until legal challenges to the institution posed by the Trump administration are "well and truly over." The statement signals that Powell intends to remain a board member even after a new chair is seated, preserving a voice on the rate-setting committee beyond his chairmanship.

The legal backdrop to Powell's defiance sharpened earlier this month when the US Justice Department dropped a criminal probe into Powell. President Donald Trump had accused Powell of improper cost overruns in the renovation of the Fed's building. The Justice Department's decision to close the investigation was seen as clearing a path for the confirmation of Powell's successor.

Warsh moves toward the chair

Trump's nominee to replace Powell, Kevin Warsh, cleared a Senate committee on a party-line vote before his full confirmation. At his confirmation hearing, Warsh denied reaching any agreement with Trump on the direction of interest rates and said he backed what he called a "policy regime change" at the central bank. He also pushed back against suggestions that he would act as a political instrument, telling senators he was no "sock puppet."

The full Senate subsequently confirmed Warsh as Federal Reserve chair in a close vote, with Senator John Fetterman of Pennsylvania breaking from his Democratic colleagues to side with Republicans and provide a margin for passage.

Independence questions linger

Warsh's nomination drew scrutiny throughout the process, with critics pointing to Trump's repeated public pressure on the Fed to cut interest rates as a reason to doubt whether the incoming chair would act independently. Warsh maintained at his hearing that he would make decisions based on economic data rather than political direction.

Powell's pledge to remain on the board is widely read as an effort to anchor institutional continuity during the leadership transition and to contest, through his continued presence, any executive attempt to remove board members without cause.