Decision is the first since the news of a justice department investigation into the Fed broke
The United States Federal Reserve announced that it will hold interest rates steady in a range between 3.5 and 3.75 per cent on Wednesday. Markets had largely priced in a hold in the leadup to the meeting, which has been largely overshadowed by political pressures exerted on the Fed by the Trump Administration.
Earlier in January, Fed Chair Jerome Powell explicitly pushed back against threats to Fed independence, sharing that the US Justice Department had launched an investigation into the Fed's ongoing office rennovation project, which he described as punishment for keeping interest rates higher than President Trump wants.
The Fed's statement following the Federal Open Markets Committee (FOMC) meeting, focused on underlying economic data in its justification for a hold.
"Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated," the statement reads.
The FOMC has also become increasingly divided over recent decisions, with more dovish and more hawkish governors openly voting for different outcomes. This is something of a departure for the body which has long maintained unanimity in its interest rate decisions. Governors Miran and Waller voted against a hold at this meeting, preferring a quarter-point cut.
"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks," the statement reads. "The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective."
