Fed's Steady Stance: Powell's Lasting Impact Amid Political Tensions

A Reuters poll suggests the Federal Reserve will maintain its current interest rate through this quarter and potentially until Chair Jerome Powell's term ends in May. Despite political tensions and Trump's criticism, economists predict future reductions and strong U.S. economic growth, driven by AI investments and tax cuts.

The Federal Reserve is widely expected to hold its key interest rate steady through the current quarter and possibly until the end of Chair Jerome Powell's tenure, according to a Reuters survey of economists. This marks a shift from the previous month's expectations of at least one interest rate cut by March.

Economists cite strong U.S. economic growth and persistent inflation above the Fed's 2% target as reasons against immediate rate cuts. However, political pressures and potential criminal investigations loom large as President Donald Trump has criticized Powell and attempted to remove Fed Governor Lisa Cook.

While the economic outlook suggests a steady hand on rates, the poll showed a slight majority expecting future reductions in the latter half of the year. Meanwhile, the U.S. economy is projected to grow at a steady pace, fueled by AI investments and tax reforms, despite ongoing political uncertainties.

(With inputs from agencies.)