Four key takeaways from Jerome Powell's final rate decision as Fed chair

Federal Reserve Chair Jerome Powell held rates steady at 5.25-5.50% in what will be his final monetary policy decision before stepping down. Powell emphasized uncertainty about how the Iran war will affect US inflation, warning that higher oil prices could reignite service-sector inflation that had been cooling.

Powell directly addressed political attacks on Fed independence, defending the central bank's insulation from partisan pressure and reaffirming its focus on long-term inflation goals. Data suggest the Fed has paused its rate-cutting cycle and rates may remain elevated through 2026 amid persistent economic uncertainty. The next chair will inherit a complex backdrop of geopolitical risk, sticky core inflation, and political tensions.

Markets have repriced expectations significantly lower for rate cuts, with June now priced at less than 20% odds. Powell's tenure ends amid heightened scrutiny over the Fed's role in an increasingly polarized political environment, with Trump having publicly criticized him and signaled intent to appoint a loyalist to the board.