Fed's Rate Hold Steers U.S. Economic Growth Amid Political Challenges

The U.S. Federal Reserve is predicted to maintain its key interest rate until May, with expectations for cuts later. Economic growth remains strong, but debates on rate policies and political influences, including criminal charges against Chairman Powell, create uncertainty.

The U.S. Federal Reserve is likely to maintain its key interest rate through this quarter and potentially until Jerome Powell's chairmanship concludes in May, according to a Reuters poll of economists. This represents a shift from last month's outlook when a rate cut was anticipated by March.

Despite the robust economic growth in the U.S., inflation remains above the Federal Reserve's 2% target, deterring immediate rate cuts. The division among policymakers is further complicated by political pressures, including legal charges against Powell for renovation issues at the Fed's headquarters and attempts by the Trump administration to modify the Federal Reserve's leadership.

Looking ahead, most economists expect rate cuts post-Powell's tenure, which aligns with the projected steady economic growth rate of 2.3% for this year. Experts anticipate investments in AI to boost the U.S. GDP significantly by 2026, albeit with concerns about sustained inflation levels.

(With inputs from agencies.)