There was no interest rate cut from the Federal Reserve on Wednesday evening, as a majority of members voted to keep the key interest rate unchanged at 3.5 to 3.75 percent.
The announcement comes as the Trump administration prepares to unveil the president’s nominee for Fed chief. Treasury Secretary Scott Bessent, who is responsible for recruiting Powell’s successor, said in early January that the announcement would come before the end of the month, but said in an interview with Yahoo on Wednesday evening that it could be another week.
Four names emerged in the speculations. Former favorite Kevin Hassett’s star has fallen since Donald Trump recently declared that he would prefer to keep Hassett as head of his economic council.
Two candidates with more direct ties to the central bank — Christopher Waller, who currently sits on the Fed’s board, and Kevin Warsh, who previously served on the board — remain in speculation. The election of Christopher Waller would be a signal that the Trump administration may be moving away from its hard line on the Fed.
But last week a brand new name emerged. The favorite candidate on betting sites right now is Rick Rieder, currently chief investment officer of global fixed income at asset management giant Blackrock.
According to information from American media, Rieder is said to have had a positive meeting with Donald Trump. The investment manager has regularly published research over the past year warning that the U.S. labor market is already beginning to slow rapidly due to efficiencies associated with the widespread adoption of AI tools. He has advocated for rapid and sweeping interest rate cuts, similar to the monetary policy line that Donald Trump has repeatedly urged the central bank to follow.
– “Very impressed,” summed up President Rieder in a recent interview with the American television station CNBC on the occasion of his visit to the World Economic Forum in Davos.
The latest from the Federal Reserve The rate path leaves the door open for at least one rate cut this year, but it was a dissenting committee that voted to cut the key rate in December. Temporary Trump adviser Stephen Miran preferred to cut the key interest rate more, while two other members reserved the decision and preferred to leave the key interest rate untouched.
One reason for the division is the disagreement that inflation remains at too high a level and may even rise again. For over a year and a half, the key inflation indicator, which the central bank is supposed to monitor particularly closely, has fluctuated between around 2.6 and 3 percent – well below the peak values of recent years, but stable above the inflation target of 2 percent.
During the last one This month, some measures of investor inflation expectations are also trending upward again as the U.S. economy appears to be gaining momentum. A growth model from the Atlanta Fed suggests growth continued to accelerate late last year and more stimulus is expected from the White House ahead of the fall midterm elections.
At the same time, the risk that last year’s tariffs could fuel inflation again has not completely disappeared. A review of import data by German think tank Kiel Institute shows that up to 96 percent of tariffs were paid by U.S. importers rather than foreign exporters.
“The tariffs are, in the truest sense of the word, an own goal,” the analysts write.
However, according to Jerome Powell, the situation has improved compared to December and during Wednesday’s press conference he described the labor market as more stable and inflation risks as more muted than before.
The Fed chief repeatedly declined to answer questions about the Justice Department’s investigation into the renovation of the central bank’s headquarters or to comment on whether he plans to remain on the central bank’s board after stepping down in the spring.
But he had a call for his successor:
– Stay away from politics.
Read more:
The top economist: “The Greenland crisis is a nail in the coffin for the dollar”
Sharp escalation in the dispute between the White House and the Fed
