Fed Holds Rates as Powell Flags Inflation, To Stay on as Governor

Inflation remains elevated, partly due to higher energy prices, the central bank said, signalling a neutral stance going forward. It also flagged rising uncertainty tied to developments in the Middle East. 

This marks the Fed’s third rate hold this year, following earlier meetings in January and March.

In a Q&A with reporters, Powell confirmed that this was his final press conference as chair. However, he said he plans to remain on the Fed’s board as a governor for an undetermined period and until the investigation is well and truly laid to rest.

Powell said he plans to stay on to tackle legal pressure that weighs on the institution and makes it harder for staff to do their jobs. He said that his decision has nothing to do with the "verbal accusations" being levelled against the institution by "elected officials," which he described as unprecedented in the Federal Reserve's 113-year history.

Market reactions

Crypto markets reacted negatively to the decision as Powell prepared to take questions from reporters at the usual press conference that follows the announcement. 

Bitcoin (BTC) fell to around $75,000, down about 1.5% on the day, while ether (ETH) was down around 2.3% on the day to around $2,220 in the minutes after the rate decision announcement. At 19:00UTC, BTC was changing hands for around $75,400 and ETH for around $2,240.

The broader crypto market cap stood at $2.62tn, down nearly 1% on the day.

Trump vs. Powell

The Fed’s decision comes despite calls from US President Donald Trump to lower interest rates to support growth.

Overall, Powell's final year as chair has been shaped mainly by a strained relationship with Trump since he returned to office in January 2025.

Trump has argued over the past year that the Fed and Powell should move faster to cut rates to boost the economy, all the while pushing tariffs and other policies that have added pressure to prices and increased uncertainty.

Meanwhile, Powell and other policymakers have taken a more cautious stance, stressing that decisions need to be made based on economic data and not political pressure. 

The era of Warsh 

Most recently, Trump nominated Kevin Warsh to succeed Powell. Warsh was advanced by Republicans on the Senate Banking Committee for a full Senate vote earlier today.

"[Warsh's] rate record is the most hawkish of any incoming Fed chair in a generation, and his preference for balance sheet reduction tightens the macro corridor if implemented," Oliver Carding, head of marketing at management consulting firm Tesseract Group told Sandmark.

Carding added that Warsh’s stance on Bitcoin is also something institutional desks are still trying to price in. In his 21 Apr Senate confirmation hearing, Warsh called for clearer rules on what counts as a commodity versus a security – something that would directly affect how crypto is regulated.

"But intellectual respect for Bitcoin as a policy thermometer is not the same as protecting its price from the macro conditions that cause it to fall," Carding said. "If Warsh tightens aggressively, the thermometer simply reads lower. From his framework, that is the market functioning as intended."