WASHINGTON, D.C. — The Federal Reserve voted Wednesday to maintain its benchmark interest rate at 3.5% to 3.75%, a move that directly rebuffs President Trump’s calls for aggressive cuts. The decision marks a pause after three consecutive reductions in late 2025 and underscores the central bank’s commitment to independence amid unprecedented political friction.
In a post-meeting press conference, Chair Jerome Powell stated that current monetary policy is “appropriate” and that the economy is expanding at a “solid pace.” While the President has argued that high rates cost the U.S. “hundreds of billions,” Fed officials cited a labor market that has stabilized and a need to keep policy restrictive to bring inflation back toward the 2% target.
The decision was not unanimous; Governors Christopher Waller and Stephen Miran dissented, both favoring a quarter-point cut. Waller is currently on the White House shortlist to replace Powell when his term as chair expires in May.
The DOJ Investigation
The meeting took place under the shadow of a Department of Justice (DOJ) criminal investigation into Powell. The probe, led by U.S. Attorney Jeanine Pirro, centers on a $2.5 billion renovation of the Federal Reserve’s headquarters. Specifically, investigators are looking into whether Powell misled Congress regarding the project’s scope and costs during testimony in June 2025.
Powell has been unusually blunt in his response, framing the investigation as a “pretext” for political intimidation.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment… rather than following the preferences of the president,” Powell remarked earlier this month.
Market Impact and Outlook
While Trump criticized the Fed’s “stiff” posture on Truth Social, suggesting the rate drop “could have been doubled,” markets have reacted with volatility. Gold recently surged toward $4,600 an ounce as investors weigh the potential for a constitutional crisis regarding central bank independence.
| Key Indicator | Current Level |
| Fed Funds Rate | 3.5% – 3.75% |
| 30-Year Mortgage | ~6.09% |
| Inflation (Nov) | 2.8% |
| Gold Price | ~$4,600/oz |
The Supreme Court is also currently reviewing a separate attempt by the Trump administration to fire Fed Governor Lisa Cook, further complicating the legal landscape for the central bank as it enters 2026.
