3 min readMay 1, 2026 06:02 AM IST First published on: May 1, 2026 at 06:02 AM ISTThe US Federal Reserve’s decision to keep interest rates unchanged in its April meeting was along expected lines. The conflict in West Asia, the consequent dislocations in the energy market and supply chain disruptions, have led to considerable macroeconomic uncertainty. While committee members have opted to wait in order to gauge the impact of these developments on inflation and growth, what was noticeable was the growing disagreements over the direction of policy. The dissent — one member preferred to lower interest rates, while three others opposed the “easing bias in the statement” — has been the greatest in recent years. This comes at a particularly challenging time for the Fed. The central bank is going through a leadership transition —Jerome Powell’s term as Fed chair ends on May 15, and Kevin Warsh, Trump’s choice, has been confirmed by a Senate banking committee.Under Powell, the Fed confronted multiple shocks, ranging from the Covid pandemic to the energy market disruptions following the Russia-Ukraine conflict and the war in West Asia. During his term, the central bank was criticised for being “behind the curve” and not raising rates fast enough to combat inflation following the pandemic. More recently, Powell and the Fed have also faced a barrage of criticism from US President Donald Trump. In his second term, Trump has been quite vocal in his criticism of the direction of monetary policy. His attempts to pressurise the Fed into lowering interest rates have raised apprehensions over the independence and autonomy of the central bank. It was only a few days ago that the US Justice Department dropped its investigation over the Fed’s building renovations — an investigation Powell had framed in the context of “the administration’s threats and ongoing pressure”.AdvertisementThe leadership change at the Fed — the full Senate vote will be held in May — will be closely watched. Inflation in the US has edged upwards —consumer prices rose 3.3 per cent in March amid the war in Iran. Gas prices are now at $4.3, up from $3.18 a year ago. But the demands to ease policy may well continue. The political context is unlikely to change. The challenge before the next Fed chair will, therefore, be to resist political pressure, safeguard the autonomy and independence of the central bank.