Powell’s Last Big Meeting: What Comes After

The Federal Reserve is poised to maintain current interest rates at its upcoming meeting, many of whom anticipate this will be the last session chaired by Jerome Powell.

Warsh’s Nomination Gains Momentum

• Last week, a path opened for President Trump’s pick, Kevin Warsh, to be confirmed after the Justice Department decided to end a criminal probe into Powell and the Fed.
• The Senate Banking Committee is expected to advance Warsh’s nomination to a full vote on Wednesday morning.
• Lawmakers, led by North Carolina’s Thom Tillis, had blocked Warsh until the investigation concluded. The Justice Department has now closed the criminal case and handed it to the Fed’s inspector general, who found no wrongdoing.

Powell’s Future on the Board

• Powell may remain on the Fed board until 2028, even after his chair term ends in May.
• He has said nothing about stepping down, so the meeting’s press conference will focus on his future plans.
• Economists at UBS suggest Powell might stay as governor if the probe could restart, a scenario that would be unprecedented since 1948.

Market Outlook

• Citigroup’s chief U.S. economist predicts the meeting will be less market‑impactful because policy rates are expected to stay unchanged.
• The U.S. economy faces several challenges: a war in the Middle East, rising oil prices (up nearly 70% this year), and soaring jet fuel costs leading airlines to cut flights.
• Inflation climbed above 3% in March.

Labor Market Puzzle

• Job gains were strong in January, but February saw a loss of 133,000 jobs before March added 178,000.
• The mixed signals suggest no clear policy moves are obvious.

Investigative Uncertainty

• Powell’s decision to stay on the board may hinge on an investigation that began over Fed headquarters renovations.
• The Attorney General warned a new investigation could start if needed, while White House officials stated the case was not officially dropped.