The Fed will meet April 28-29 (local time) and is set to announce its benchmark rate at 2 p.m. April 29 (3 a.m. April 30 in South Korea). Markets largely expect the rate to remain at 3.50% to 3.75%, unchanged since last December.
The meeting coincides with the end of Powell’s term as Fed chair on May 15, with Kevin Warsh’s Senate confirmation as the next chair appearing within reach. With a criminal probe tied to renovations of the Fed’s headquarters shifting from the Justice Department to the Fed inspector general, a political factor that could have delayed Warsh’s confirmation has eased. That has fueled expectations that this could be Powell’s final FOMC news conference.
Investors are focused on Powell’s guidance on where rates go next. Attention had been on when rate cuts might resume, but expectations have cooled after oil prices jumped following the Iran war.
Reuters reported Brent crude has risen about 50% since the war began, and that higher gasoline and energy prices contributed to a sharp increase in last month’s U.S. consumer price index. Reuters also said the bond market is reflecting the possibility that the Fed’s policy rate could stay near current levels at least through mid-2027.
That shift could show up in the Fed’s statement. While holding rates steady, the Fed has previously left the impression its next move would be a cut. If the statement highlights both inflation risks and slowing-growth risks — and leaves open the possibility of hikes as well as cuts — markets could read it as a signal the Fed is keeping the door open to tighter policy. Bank of America said Powell’s news conference “could sound more hawkish than the market expects.”
As sensitive as monetary policy is the question of Fed independence. Axios said that while Warsh’s confirmation prospects have improved, a key unknown is whether Powell will remain on the Fed’s Board of Governors after stepping down as chair. Powell’s term as a governor runs through January 2028. Traditionally, Fed chairs have also resigned their board seats when their chair terms end, but Powell has left open the possibility of staying amid pressure on the Fed from the Trump administration.
Questions also remain about Warsh. In a CNBC Fed survey of 26 economists, strategists and analysts, 50% said they expect Warsh to conduct monetary policy independently, while 46% said his independence could be constrained. In the same survey, 58% said Warsh would likely be favorable to rate cuts, and 65% expected him to be active in shrinking the Fed’s balance sheet, meaning reducing its asset holdings.
* This article has been translated by AI.
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