WASHINGTON – The Federal Open Market Committee announced that the federal funds rate will remain at 3.5-3.75% on Wednesday. In his first press conference since the Department of Justice opened a criminal investigation into renovation spending, Federal Reserve Chairman Jerome Powell took questions from reporters but refused to directly comment on politics.
“I don’t respond to comments from other officials,” he said. “Whoever they may be, it’s just not appropriate to do that.”
The chairman shut down questions on the Department of Justice’s subpoenas, Secretary Scott Bessent criticizing his appearance at a Supreme Court hearing and whether he will remain at the Fed when his term concludes in May.
Powell’s deflections come roughly two weeks after he directly called out the Trump administration for allegedly pressuring him to continue cutting rates.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” he said on Jan. 11.
The federal funds rate was set after a vote by the FOMC board Wednesday. Ten of the 12 FOMC board members voted in favor of keeping the rate steady, while Trump-appointed governors Stephen Miran and Christopher Waller voted to lower it by 25 basis points for the fourth consecutive time. The vote followed two days of meetings to evaluate macroeconomic stability.
Powell said the decision to hold interest rates steady received “broad support” from the committee.
He further explained that the Fed sets the rate with the mandate to achieve both maximum employment and stable prices. While he said inflation has eased significantly, it remains elevated above the long-term goal.
“Expectations have been solid, and they reflect confidence in the return to two percent inflation,” he said.
That goal is the root of tensions between the Trump administration and the Fed. While Powell wouldn’t directly comment on the remarks he made on Jan. 11, he emphasized the importance of keeping political influence out of monetary policy action.
While in Davos, Switzerland, for the World Economic Forum last week, President Donald Trump said in an interview with CNBC that if Powell stays on the Board of Governors, “his life won’t be very, very happy, I don’t think.”
Trump responded to FOMC’s decision on Thursday, posting on Truth Social that Powell is a “moron” who is “hurting our country.” He called for the Fed to lower interest rates, stating that the U.S. should have the lowest interest rate of any country in the world.
Powell said he was confident that the Fed’s independence is not currently at risk. However, when asked what advice he would give to his successor, Powell said the chair should not get involved with any branch of government.
“Stay out of elected politics,” he said. “Don’t get pulled into elected politics. Don’t do it.”
Regarding artificial intelligence, Powell was resolute in its positive impact on the economy. Some reports point to AI as weakening the job market by increasing layoffs, but he said a tech-driven rise in unemployment has been offset by a decrease in supply from low immigration numbers.
Reaffirming his stance on AI, Powell also said technology ultimately increases productivity, even though the labor market weakened with a rising unemployment rate between September and November 2025.
“Every technological wave will eliminate some jobs and create other jobs,” he said. “It’s always been the case. If you look back, wave after wave after wave, there will be some disruption. But ultimately, technology increases productivity, which is the basis for rising wages.”
