Fed Holds Rates as Water Bills Surge & EU-India Trade Looms

US Federal Reserve Holds Interest Rates, Defends Independence

The US Federal Reserve (Fed) voted to hold interest rates steady on Wednesday, maintaining its key lending rate between 3.5% and 3.75%, according to a statement released by the central bank. The decision comes after the Fed lowered the rate three times last year, as reported by Euronews. The Fed cited that economic activity in the US "has been expanding at a solid pace," a more optimistic assessment than the previous month's characterization of "modest" growth.

Fed Chair Jerome Powell defended the independence of the central bank during the announcement. This defense comes amid past criticism from former US President Donald Trump, who frequently urged the Fed to cut rates more aggressively, according to BBC Business. Furthermore, Powell's testimony to the Senate regarding renovations to Fed buildings is currently under criminal investigation by federal prosecutors, BBC Business reported. Powell declined to comment on the probe during Wednesday's announcement, reiterating the importance of central bank independence.

The Fed's decision to hold rates indicates confidence in the US economy. Euronews reported that the central bank noted signs of stabilization in the job market, alongside healthy economic growth. When the Fed reduces its key rate, it tends to lower borrowing costs for things like mortgages, car loans and business borrowing, though those rates are also influenced by market forces.

The decision to hold interest rates arrives at a complex time in international trade. Al Jazeera reported that the EU and India recently struck one of the biggest trade deals in history, months after the United States imposed tariffs on both.