Jerome Powell to stay on Fed board after central bank holds rates steady in defiance of Trump
The US Federal Reserve chair, Jerome Powell, will remain on the central bank’s rate-setting board after his term as chair ends in May, a contentious move that signals continued uncertainty at the Fed.Powell made the announcement after the Fed board on Wednesday left interest rates unchanged for the third time this year, despite Donald Trump’s continued demands for rate cuts.Before Wednesday, Powell said he would step down from the board when the White House’s investigations into renovations at the Fed are “well and truly over with transparency and finality”.Powell’s term as chair ends on 15 May.His term as Fed governor ends in January 2028.
While Powell said he was “encouraged” by the justice department’s decision to drop its investigation, Powell said there were “remaining steps in the process” he was watching carefully.“My decisions on these matters will continue to be guided entirely by what I believe in the best interest of the institution and the people we serve,” Powell said.He added it was important that the Fed “doesn’t get pulled into politics, trying to help or hurt any politician or political party”.He said: “The things that have happened really in the last three months, I think, have left me no choice but to stay until I see them through at least that long.”On Wednesday, Fed officials continued to cite elevated inflation, slow job growth and uncertainty in the Middle East as reasons for leaving rates untouched.
“Jobs gains have remained low, on average, and the unemployment rate has been little changed in recent months.Inflation is elevated, in part reflecting the recent increase in global energy prices,” the board said in a statement.While only one of the board’s 12 voting members voted against leaving the rate unchanged, the Fed board also signaled growing dissent within its ranks: three members supported maintaining the current rate, but did not agree with the Fed suggesting it will lower rates later this year.Brent crude oil, the global benchmark, briefly hit $119 a barrel on Wednesday, a monthly high and a 7% jump over the course of a day as uncertainty around the war in Iran looms.The Fed’s meeting ended hours after the US Senate banking committee confirmed the former Fed governor Kevin Warsh, clearing a procedural path for the whole Senate to confirm him as new chair of the central bank.
Warsh is expected to be more amenable to Trump’s calls for a rate cut than the current chair, Powell, who has been the target of hostile attacks along with the central bank over its rates agenda.But with just one vote of 12 on the Fed’s rate-setting board, Warsh cannot deliver cuts without the support of his fellow board members.By setting interest rates, or the cost of borrowing money, the Fed has enormous power over consumer prices and unemployment.Economists largely agree that an independent central bank is essential for a stable economy.Higher interest rates have helped bring inflation down from a generational high of 9.
1% with minimal impact to the labor market,But the central bank’s influence has been overshadowed by policies carried out by the White House that have had enormous influence on the economy, from Trump’s tariffs and immigration crackdown to higher energy prices amid the war with Iran,In response to Trump’s policies, Fed officials have taken a measured, wait-and-see approach: after reaching a two-decade high of 5,25% to 5,5% in 2023, rates are now down to 3.
5% to 3.75%.But Trump and his economic advisers have been impatient for rate cuts, arguing that Fed officials are withholding power to stimulate economic growth.Trump believes the Fed should be lowering interest rates to a greater degree, which would stimulate the economy at the risk of raising prices.The latest reading on US inflation showed prices went up 3.
3% in March – 1.3% higher than the Fed’s target inflation rate of 2%.Meanwhile, the unemployment rate has remained stabilized at 4.3% after rising slightly last year.Trump’s fury culminated in a justice department investigation into building renovations at the Fed that went over budget.
The president has suggested that Powell’s role in the renovations as chair may have been corrupt,In a rare rebuke of the White House, Powell in January called the investigation a “pretext” after the Fed resisted Trump’s attempt to influence interest rates,The investigation cast a shadow over Warsh’s nomination after the Republican senator Thom Tillis said he would block Warsh’s nomination until the White House dropped Powell’s investigation,The department dropped its investigation into Powell last week, satisfying Tillis’s demand,But the White House suggested other investigations into the renovations remain active.
“I have directed my office to close our investigation as the [inspector general’s office] undertakes this inquiry,” the US attorney for the District of Columbia, Jeanine Pirro, wrote in a statement.“Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so.”Powell at the press conference made some of his most pointed remarks yet on the state of Fed independence, which he said is “at risk” amid “legal assaults”.“The institution is being battered over these things.We’re having to resort to the courts to enforce our … ability to make monetary policy without political considerations,” Powell said, adding that while he was confident that the Fed will make informed decisions and analysis “we’ve had to fight for it”.
Bank of England warns ‘higher inflation is unavoidable’ after leaving interest rates on hold
The Bank of England has left interest rates unchanged at 3.75% but warned that the UK may need to brace for hikes later this year, as “higher inflation is unavoidable” as a result of the war in the Middle East.The Bank’s rate-setting monetary policy committee (MPC) voted to leave borrowing costs on hold on Thursday, with its nine-member committee split 8-1 in their decision.Andrew Bailey, the governor of the Bank of England, said: “The war in the Middle East is causing inflation to rise again this year.”He added that the policymakers were monitoring the global situation and its impact on the UK economy “very closely”, but that the decision to hold rates at 3
Eurozone inflation soars to 3% as Iran war drives up energy prices
Inflation across the eurozone has soared to 3% this month as the Iran war drove up energy prices and growth stumbled.Consumer prices rose by 3% in the year to April across the single currency bloc, data from the statistics body Eurostat showed on Thursday morning, up from 2.6% in March and 1.9% in February.That took inflation further above the 2% target set by the European Central Bank, which is scheduled to set eurozone interest rates on Thursday afternoon
Maryland becomes first state to ban surveillance pricing in grocery stores
Maryland has become the first state in the US to ban surveillance pricing in grocery stores.Maryland’s law bans grocers and third-party delivery services from using a person’s personal data to set higher prices. Wes Moore, the governor, signed the measure into law on Tuesday. “At a time when technology can predict what we need, when we need it, when we’ll pay for it and also – when we’ll pay more for it, and at a time when we’re watching how big companies are then using these analytics against us to make record profits, Maryland is not just pushing back. Maryland is pushing forward because we are going to protect our people,” Moore said at the bill signing ceremony
Tech giants’ results show rosy outlook for AI boom and US stock market
Unusual simultaneous reports of financial results by several of the US’s largest tech companies gave positive indications for the stock market despite widespread fears of an AI bubble on Wednesday.Four of the so-called Magnificent Seven tech stocks, the most valuable publicly traded companies in the world, reported their quarterly financial results on Wednesday. The cluster is not typical, as these disclosures do not often occur on the same day, and provides a snapshot of how the tech industry is faring as it rides the AI boom. Amazon, Alphabet and Microsoft all revealed double-digit gains in their cloud computing units, which have seen supercharged growth thanks to increasing adoption of AI. Meta, not in the business of cloud computing, failed to meet Wall Street expectations
‘I really was one of those bandwagon fans’: meet Katharina Nowak, F1’s youngest race president
Before her first Miami Grand Prix in charge, Nowak opens up on F1’s boom time in the US and flying the flag for women in the sportThere is an air of buoyant confidence about Katharina Nowak that is striking but also understandable given the robust state of Formula One in the United States and at the Miami Grand Prix, where the 29-year-old who is at the helm of the race believes the sport only has more to come.“F1 is at its strongest right now that we’ve seen, the interest in F1 is still going up and will go further,” she says in the buildup to this weekend’s meeting in Florida. “From my seat at the table, we are seeing the interest continue to grow.“Obviously 2022, when we launched the Miami GP, was a perfect storm but last year ESPN reported record-breaking viewership numbers in the United States for 22 out of the 24 races. We’ve seen it in our success in our ticket sales this year that, there is strong demand for the Miami GP and for F1
Trial or error? Lancashire bear brunt as county game adjusts to new substitute rules | Ali Martin
Lancashire are not the most popular county at the moment. From next week the live-streamed coverage of their matches at Old Trafford will go behind a paywall – free to members, £20 a season if not. And so the thrill of Jimmy Anderson bowling from the end that bears his name will play out to a smaller audience.Although beyond this, or the broader sadness at Old Trafford becoming a dystopian hotel-cum-events space where the first team feels secondary, there seems to be widespread agreement that the Red Rose have been hard done by of late: namely, in the ongoing trial of injury replacements in English cricket.To recap, this year sees teams in the County Championship able to replace a player if they are afflicted by injury, illness or a significant life event – a broadening of existing allowances for concussion or England call-ups
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Jerome Powell to stay on Fed board after central bank holds rates steady in defiance of Trump