Powell’s final call: Fed holds rates amid sharp divide

The US Federal Reserve kept interest rates unchanged for the third consecutive meeting in a range of 3.5% to 3.75%, but the decision exposed deep divisions within the central bank. Governor Stephen Miran once again dissented, voting for a 25 basis point rate cut, marking his sixth such disagreement, while three other officials also opposed the stance, though they favoured a clearer signal that future cuts are not guaranteed.

The split is the widest within the Fed since 1992.

The Fed said it will continue taking a cautious, data-driven approach as policymakers weigh inflation risks amid rising energy prices. Inflation concerns have intensified after a sharp rally in oil markets, triggered by reports of escalating tensions around Iran and disruptions to shipping through the Strait of Hormuz.

West Texas Intermediate surged about 7% above $107 per barrel, while Brent crude climbed nearly 7% past $119, its highest in recent weeks.

Markets turned cautious following the Fed decision, with the S&P 500 slipping 0.3% even as oil prices spiked.

Separately, the Senate Banking Committee advanced Kevin Warsh’s nomination as the next Federal Reserve chair in a party-line vote on Wednesday, moving him a step closer to final confirmation in the Republican-controlled Senate. If confirmed, Warsh would succeed Jerome Powell as Fed chair, marking a key leadership transition at the US central bank.