Federal Reserve Chair Jerome Powell has announced that he will remain on the central bank's board as Governor after his term concludes in May. This decision was revealed during a press conference that followed the Fed's decision to maintain interest rates at 3.5%-3.75%.
Powell expressed concerns over ongoing legal actions against the Fed, stating that these challenges are undermining the institution and potentially jeopardizing its ability to implement monetary policy without political interference. "The ongoing attacks on the Fed are threatening its ability to conduct monetary policy without considering political factors, which is crucial for the public," Powell stated. Although Powell had initially planned to adopt a low profile, he feels compelled to stay due to the legal pressures. The investigation into Powell, which was previously closed by the Trump administration, could be reopened if new information emerges, according to U.S.
Attorney Jeanine Pirro. This, combined with statements from President Donald Trump and his aides, has raised concerns that Powell may still face legal challenges. As a result, Powell believes he has no choice but to remain in his position.
The Fed's decision to hold interest rates steady was widely anticipated, but the dissent from three Governors was notable, according to macro analyst Matt Mena. "The Fed's decision to maintain rates was not surprising, but the three dissenting voices calling for a more aggressive stance caught the market off guard," Mena said. The hawkish tone has had a negative impact on risk assets, with bitcoin slipping below the $75,000 support level as traders prepare for a potential retest of the $73,000 mark.
Looking ahead, there may be potential policy changes on the horizon. "The market may start to factor in the possibility of rate cuts, particularly if the CLARITY Act is passed, which could pave the way for a rally to $85,000-$90,000," Mena added.