The Federal Reserve, America's central bank, on April 29 kept the federal funds rate unchanged for the third consecutive meeting at 3.5%–3.75%, citing rising inflation risks driven by elevated global energy prices.
The decision was widely expected, as crude oil prices remain high amid geopolitical tensions in West Asia. Brent crude is trading above $110 per barrel, raising concerns that inflationary pressures could persist longer than anticipated.
The Federal Open Market Committee (FOMC) met on April 28–29 against the backdrop of heightened uncertainty linked to the US-Iran standoff.
This was also the final policy meeting chaired by Jerome Powell, whose term ends on May 15.
The FOMC voted 8–4 to keep rates unchanged, marking the highest number of dissenting votes since 1992.
One member called for a 25 basis point rate cut
Three others backed the pause but signalled no urgency to ease
The Fed reiterated its long-term goal of achieving maximum employment and maintaining inflation at 2 percent.
The central bank flagged growing inflation risks, largely due to rising energy prices.
“Inflation is elevated, in part reflecting the recent increase in global energy prices,” the FOMC said.
Powell indicated that the full impact of higher oil prices on inflation is still uncertain.
Despite global uncertainties, the US economy continues to show resilience.
Economic activity is expanding at a solid pace
Consumer spending remains steady
Labour market conditions are broadly stable
Powell noted that private domestic demand remains a strong indicator of economic momentum.
Donald Trump has nominated Kevin Warsh as the next Federal Reserve chair. His nomination has cleared a key Senate panel and awaits final approval.
Powell said this was his last press conference as chair but indicated he intends to continue on the Fed’s board as a governor for some time.
Elevated oil prices, policy uncertainty and leadership transition at the Fed are expected to keep global financial markets on edge in the coming weeks.