Federal Reserve

March 18 (UPI) — The Federal Reserve announced that it is leaving its benchmark interest rate untouched Wednesday in its first Federal Open Market Committee statement since the start of the war with Iran.

The Fed’s benchmark interest rate remains at a 3.5% and 3.75% range as the committee held on to its projection of at least one rate cut coming this year.

“Available indicators suggest that economic activity has been expanding at a solid pace,” the FOMC statement said. “Job gains have remained low and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.”

As for the war in Iran, the statement said its impact on the U.S. economy is “uncertain.”

The Fed continues to pursue monetary policies it believes will bring the rate of inflation down to 2%. In its statement it said it is “committed to supporting maximum employment,” in pursuit of its target.

Economic reports that inform the Fed’s decision have indicated pressures from inflation remain and economic growth has slowed.

Wednesday’s announcement comes on the heels of a producer price index report earlier in the day that showed the largest increase to the index for final demand goods since August 2023.

Last week, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls fell by 92,000 in February. The unemployment rate increased to 4.4%.

These reports have economists and traders cooling on the potential for interest rate cuts. Eugenio Aleman, chief economist at Raymond James, said in a statement that the wholesale inflation report on Wednesday, “likely reinforces a hold decision.”

Data from the producer price index report predates the beginning of the war with Iran.

March 13 (UPI) — A federal judge this week quashed subpoenas the Department of Justice had issued to Federal Reserve Chair Jerome Powell because they were issued to pressure him into adjusting interest rates.

Judge James Boasberg redressed the DOJ for the subpoenas, saying that their purpose had nothing to do with a probe about renovations at the Federal Reserve in Washington, D.C.

The DOJ in January launched a criminal investigation into Powell’s testimony last year about the renovations, which Powell at the time said were “pretexts” to punish him and the Fed after they did not set interest rates at levels demanded by President Donald Trump.

“The Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual,” Boasberg wrote in the opinion.

The department in January issued grand jury subpoenas in reference to Powell’s comments about the multi-year project to renovate the Fed’s office buildings during his June 2025 testimony before the Senate Banking Committee.

During a tour of the renovations, Powell disputed Trump’s over-estimates of the renovation’s cost, and threatened to sue him for the “horrible and grossly incompetent job” Powell had done on the project.

Overall, however, Trump has repeatedly ripped into and mused about firing Powell, which he cannot do, because the Fed chair has repeatedly said that interest rate changes would be dictated by only the market, rather than the preferences of any one person.

In the opinion, which was unsealed Friday, Boasberg said he blocked the subpoenas because “a mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning.”

WASHINGTON — A federal judge on Friday quashed Justice Department subpoenas issued to the Federal Reserve in January, a severe blow to an investigation that has already attracted strong criticism on Capitol Hill.

Judge James Boasberg said that a “mountain of evidence suggests” that the purpose of the subpoenas was simply to pressure the Fed to cut its key interest rate, as President Trump has repeatedly demanded.

Fed Chair Jerome Powell revealed the investigation Jan. 11, prompting Senator Thom Tillis, a North Carolina Republican to block consideration of Trump’s pick to replace Powell as Fed chair when his term expires May. 15.

Rugaber writes for the Associated Press.

Feb. 20 (UPI) — The 43-day government shutdown in the fall stymied U.S. gross domestic product growth in the fourth quarter, the Bureau of Economic Analysis reported Friday.

GDP for the fourth quarter of 2025 grew by 1.4% on an annual basis, more than a full point below the Dow Jones estimate of 2.5%. Consumer spending climbed more slowly than expected, while government spending lagged behind greatly.

The slowdown in growth is significant when compared to the 4.4% growth recorded in the third quarter.

While economic growth slowed, inflation continued to apply pressure. The personal consumption expenditures price index, the key measurement of inflation used by the Federal Reserve, increased by 2.9%, well above the Fed’s 2% target.

The price index for GDP purchases rose 3.7%, accelerating from 3.4% in quarter three.

The BEA report says the full effects of the record government shutdown “cannot be quantified” as the data cannot be separated. It still estimated the effects of reduced labor services by government employees.

Hundreds of thousands of government employees were furloughed during the shutdown.

“BEA estimates that this reduction in services provided by the federal government subtracted about 1.0 percentage point from real GDP growth in the fourth quarter,” the report says.

Government spending in defense and nondefense declined, as did spending on exports.

Health care services were a leading source of growth in consumer spending. Decreased spending on goods offset this growth.

Feb. 18 (UPI) — White House economic adviser Kevin Hassett on Wednesday said that employees at the New York Federal Reserve should face punishment for publishing “the worst paper I’ve ever seen in the history of the Federal Reserve System.

The research published Feb. 12 concluded that most of President Donald Trump‘s tariffs are being paid by U.S. businesses and consumers. The authors said 90% of the costs are being passed on, though it acknowledged that the effect had dropped slightly as the year went on.

In an appearance on CNBC’s Squawk Box, Hassett, the director of the National Economic Council, called it an “embarrassment” and said of the four authors, “the people associated with this paper should presumably be disciplined.”

He argued that tariffs are responsible for a higher standard of living.

“Prices have gone down. Inflation is down over time,” Hassett said. “Import prices dropped a lot in the first half of the year and then leveled off, and [inflation-adjusted] wages were up $1,400 on average last year, which means that consumers were made better off by the tariffs. And consumers couldn’t have been made better off by the tariffs if this New York Fed analysis was correct.”

Harvard Business School, Yale’s Budget Lab, the Kiel Institute for the World Economy and the Congressional Budget Office have published similar findings, Politico reported.

“Our results imply that U.S. import prices for goods subject to the average tariff increased by 11% … more than those for goods not subject to tariffs,” the paper, written by Mary Amiti, Chris Flanagan, Sebastian Heise and David E. Weinstein, said. “U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025.”

Hassett was on Trump’s short list for Fed chair, but Kevin Warsh was chosen.