Fed Meeting Today: Officials Hold Rates Steady as War Clouds Economic Outlook; Jerome Powell to Stay on as a Fed Governor

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Updated April 29, 2026

04:22 PM EDT

Jerome Powell's term as Federal Reserve Chair expires next month, but he can stay on as a Fed Governor until 2028. Daniel Heuer / Bloomberg / Getty Images

It was Fed decision day Wednesday, and it was also likely the last time that Jerome Powell presided over the Federal Reserve's policy committee. It won't be the last time we'll see him at the central bank.

Following a two-day meeting, the Federal Open Market Committee announced that it decided to leave the Fed's benchmark interest rate unchanged, as the Iran war creates uncertainty about the outlook for the economy. Most of the attention focused on what Powell had to say during his last press conference as chair of the central bank.

The Fed was widely expected to stand pat on rates, as officials maintain a wait-and-see approach while they assess the impact of the Iran war on inflation, the labor market and the broader economy. Investors were keen to hear what Powell thought about the economic outlook, as well as anything he had to say about the possibility he would remain at the Fed.

Powell's term as Chair, a position he has held for eight years, ends in May, before the FOMC's next meeting in June, though his tenure on the Fed's board of governors runs until 2028. Early in the press conference, Powell said he would stay on as a governor for some period of time. President Donald Trump's nominee to take over the top spot at the Fed, Kevin Warsh, is currently going through the confirmation process in the Senate.

Read below for more details on the Fed's rate decision and what Powell said during an eventful press conference.

Powell Wraps Up Last Press Conference

April 29, 2026 04:13 PM EDT

Powell received a smattering of applause from the press corps—it's unusual for journalists to dole out such praise to officials—as he took off his glasses, chuckled slightly and walked away from the podium.

"Thank you very much, ladies and gentlemen," he said. "I won't see you next time."

Jerome Powell departs his last press conference after eight years in the role of Fed Chair. Daniel Heuer / Bloomberg / Getty Images

Why The Fed isn't Overlooking The Oil Shock

April 29, 2026 03:39 PM EDT

As Powell noted, the Fed's typical playbook calls for policymakers to "look through" (i.e. ignore) oil price shocks, since they are typically short-lived and subside quickly. Following that playbook, the Fed might cut its key interest rate to boost the economy and the job market, on the assumption that inflation would resume the downward trajectory it was following in 2024.

This time is different.

The disinflationary trend was several dozen tariffs ago, and inflation has run above the Fed's goal of a 2% annual rate since 2021.

"We're several years above 2% inflation, and that we're already looking through the tariff shock," Powell said. "So I think we're going to be very cautious about that. The question about about looking through energy really is not in front of us right now. It hasn't even peaked yet, and I think we'd want to see the backside of that and progress on tariffs before we even thought about about reducing rates."

Powell Defends Fed Independence

April 29, 2026 03:24 PM EDT

Powell said the Trump administration's legal actions against the Fed—the Justice Department's investigation of Powell, and Trump's efforts to fire Fed governor Lisa Cook—threatened its traditional independence, and its ability to make monetary policy for the good of the economy rather than political considerations.

"The institution is being battered over these things," he said. "We're having to resort to the courts to enforce ... the ability to make monetary policy without  political considerations."

Rate Hikes Aren't On The Table

April 29, 2026 03:14 PM EDT

Powell clarified the stance of the three dissenting members who voted to remove language from the FOMC statement indicating a bias towards cutting rates in the future.

"People are not saying we need to hike now," he said. "It's more a question of, don't we kind of feel that we should be neutral?"

In response to a question from a reporter, Powell said the Fed grappling with an unprecedented economic situation, resulting in varying views about how to deal with it. hence, an unusually large number of dissenting votes.

"We have always had vigorous debates," he said. "We're in an unusually difficult situation."

Powell to Stay on as Fed Governor

April 29, 2026 02:39 PM EDT

After providing an overview of the economic scenario, Powell took the opportunity to reflect on the occasion of his last press conference as Chair. He also discussed his future at the Fed.

"After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined," Powell said. "I plan to keep a low profile as a governor. There is only ever one chair of the Federal Reserve Board when Kevin Warsh is confirmed and sworn in; he will be that chair."

Powell has previously said that he would stay on as a governor—which he is entitled to do until the end of that term in 2028—as long as a federal investigation for cost overruns at the Federal Reserve was ongoing. The DOJ dropped the investigation into Powell last week, though Jeanine Pirro, the U.S. attorney in charge of the investigation, left the door open to resume the investigation again at some point.

"I'm waiting for the investigation to be well and truly over with finality and transparency," Powell said at today's press conference. "I am waiting for that, and I will leave when I think it's appropriate to do so,"

Four FOMC Members Dissented

April 29, 2026 02:34 PM EDT

Among the members of the Federal Open Market Committee, only Fed Governor Stephen Miran voted in favor of cutting interest rates, the same as he has done at every meeting since taking office in September.

In a surprise, three FOMC members voted in favor of holding rates but objected to language included in the committee's statement indicating the Fed was more inclined to lower rates in the coming months than to raise them.

Fed Says War Clouds Economic Outlook

April 29, 2026 02:24 PM EDT

Borrowing costs are staying higher for longer because of the Iran war.

The Federal Reserve's policy committee voted Wednesday to keep the central bank's key interest rate in a range of 3.5% to 3.75%, the same level it's been all year, to wait and see how the Iran war's shockwaves hit the economy in the coming months. The hold was widely expected by financial markets.

By disrupting supplies of oil and other commodities from the Middle East, the conflict has sharply pushed up energy prices and alarmed Fed officials about the possibility of inflation accelerating. Concerns about war-related price hikes haves shaken Fed officials' confidence that inflation was subsiding down to the central bank's goal of a 2% annual rate, leading financial markets to all but abandon hopes of rate cuts this year. The fed funds rate influences borrowing costs on all kinds of loans, and serves as the Fed's main tool for pursuing its dual mandate to keep inflation low and employment high.

"Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook. The Committee is attentive to the risks to both sides of its dual mandate," the Federal Open Market Committee said it its post-meeting statement.

In recent speeches, Fed officials have voiced concerns the Iran war is posing risks to both sides of the Fed's dual mandate from Congress to keep prices stable and the economy running at full employment.

The closure of the Strait of Hormuz, the crucial waterway that normally carries 20% of the world's oil supply from the Persian Gulf to international markets, has pushed up the price of crude oil, and gasoline and diesel along with it. Gasoline prices have risen more than $1 a gallon to a national average of $4.23 from $2.98 before the war according to AAA. The spike in gasoline prices in March alone was the largest on record according to the Bureau of Labor Statistics.

The conflict has also contributed to uncertainty among business leaders, possibly dragging on a labor market that was already in the midst of a hiring slowdown before the war began Feb. 28.

How Powell's Record Stacks Up Against Predecessors

April 29, 2026 01:42 PM EDT

As chair of the Federal Reserve since 2018, Jerome Powell was supposed to keep inflation low and employment high. So, how did he do?

Powell is on track to have the lowest average unemployment rate and the third-highest average inflation among the six Fed chairs who have run the central bank since 1977.That was when Congress first directed the Fed to keep the economy running at "maximum employment" and ensure "price stability."

Inflation, as measured by Personal Consumption Expenditures, averaged 3% during Powell's tenure, above the Fed's 2% annual target and above the inflation rate when Janet Yellen, Ben Bernanke and Alan Greenspan were in charge.

Here's how he stacks up against his predecessors:

Each Fed chair had to steer the central bank through the economic challenges of the time. Powell's biggest hurdle was the onset of the COVID-19 pandemic and all the fallout that ensued.

The pandemic turned monetary policy upside down. Before 2020, central bankers were mainly worried that inflation was too low and were engineering ways to push it up to the Fed's 2% annual target. After the pandemic snarled supply chains and the government gave Americans trillions of dollars in stimulus money, inflation spiked and the Fed raised its benchmark interest rate in an effort to wrestle it down.

Powell's attempts to bring the economy into a "soft landing" from pandemic-induced inflation have been complicated in his final year. Tariffs kept inflation stubbornly above 2% and the war with Iran amplified inflation concerns by pushing up energy prices.

Unemployment followed a similar pattern, surging during the pandemic but tumbling to 50-year lows in the years that followed. The unemployment rate edged up in 2025 amid a hiring slowdown driven by uncertainty among business leaders about trade policy, but remained relatively low by historic standards at 4.3% as of March.

The economic data covering Powell's final few months in office has yet to arrive, but is unlikely to change the average much. He may take the opportunity at Wednesday's press conference to reflect on his eight years at the helm.

"He may be asked questions that look back on his entire term as Fed Chair," John Ryding, chief economist at Brean Capital, wrote in a commentary. "Judged by the inflation numbers, his record is not that great... Chair Powell had the best record on the labor-market leg of the dual mandate but by far the [worst] on price stability."

-Diccon Hyatt

How the Fed Would be Different Under Warsh

April 29, 2026 01:36 PM EDT

The Federal Reserve could look very different in a few months.

Speaking at his confirmation hearing last week, Warsh said he would run the Fed differently than his predecessors in several key ways. First, he said he would reduce the size of the Fed's balance sheet.

Starting during the Great Recession, the Fed has purchased large amounts of assets including treasuries and mortgage-backed securities as a way to stabilize financial markets and to pursue its dual mandate to keep inflation low and employment high, in a program called "quantitative easing." As of last week, those assets were worth $6.7 trillion and counting.

Warsh, long a critic of quantitative easing, said he would reduce that amount, without giving a target size for the balance sheet. He said QE was less effective as a tool for controlling inflation than the Fed's more traditional lever, setting the fed funds rate, which influences borrowing costs on all kinds of loans.

"If we were to cut rates, then broader number of people will benefit from it, versus quantitative easing, which tends to move through financial assets," Warsh said. "Half of our fellow Americans don't own any financial assets, so they're wondering what's in it for them."

Warsh also said he would change the way the Fed uses economic data to inform its decisions, especially how it measures inflation. Currently, the Fed uses core Personal Consumption Expenditures, a consumer price gauge that excludes the volatile prices for food and energy, to judge inflation trends and as a benchmark for whether it is running at the Fed's goal of a 2% annual rate.

At the hearing, Warsh advocated switching to an alternative measure calculated differently, by taking the median of "one billion prices" from public and private data sources and seeing how that moves over time.

"In a market economy, prices change all the time, and I don't want to be confused by that," he said. "I want to know what inflation really is. And I still think there's some work to do."

Warsh also indicated he might give fewer hints to the public about the central bank's future interest rate moves. He criticized the Fed's current policy of offering "forward guidance" about how the central bankers are likely to change the fed funds rate at future meetings. The Fed does this in several ways, including at the Fed chair's customary press conference held after policy meetings, as well as in the quarterly "dot plot" charts showing how high Fed officials expect the fed funds rate to be in the coming year.

"The Fed tells the whole world what their dots are going to be, what their forecasts are going to be," Warsh said in his prepared opening statement. "Well, the Fed's human, then they hold on to those forecasts longer than they should. I think if the Fed were to wait until it gets into a meeting before making a decision, that incremental deliberation can keep the central bank from compounding its errors."

-Diccon Hyatt

Senate Committee Advances Warsh Nomination

April 29, 2026 12:42 PM EDT

The Senate's banking committee voted Wednesday to send the nomination of Kevin Warsh as Federal Reserve chair to the full Senate, clearing the way for President Donald Trump's nominee to begin a four-year term at the top job at the central bank when Jerome Powell's term ends May 15.

The vote removes the last serious obstacle that stood in the way of Warsh taking over at the Fed, since Republicans control the Senate and have enough votes to confirm the nominee.

The banking committee voted for Warsh 13-11 along party lines after a key Republican senator, Thom Tillis of North Carolina, dropped his opposition. Tillis had threatened to block Warsh unless the Justice Department dropped a criminal investigation of Powell, which it did last week.

Kevin Warsh speaking last week during a confirmation hearing. Graeme Sloan / Bloomberg / Getty Images

The vote sets the stage for a transfer of power at the Fed, although it does not resolve a controversy about the independence of the central bank from direct control of the White House.

Powell and Senate democrats denounced the investigation as part of an effort by Trump to take control of the Fed, which was established by Congress to be independent and insulated from political pressure. Trump had praised the probe, which was looking into construction cost overruns at a project to renovate the Fed's Washington headquarters. Powell said the investigation was a pretense to pressure him into going along with Trump's frequent demands to sharply lower interest rates despite concerns among policymakers that doing so could stoke inflation.

Senate Democrats renewed those criticisms Wednesday in advance of the vote, and voiced concerns that Warsh would take orders from the president. Massachusetts Senator Elizabeth Warren brought up an exchange from Warsh's confirmation hearing, during which Warsh deflected questions about whether Trump had lost the 2020 election to Joe Biden.

Warsh said he would make his decisions independently.

If Warsh is confirmed by the full senate, Wednesday's meeting of the Fed's policy committee will be Powell's last as Fed chair. Powell was nominated to lead the Fed in 2018 by Trump during his first term, but the two soon fell out after Powell resisted Trump's demands to lower rates. Biden nominated Powell to a second term in 2022.

At his confirmation hearing last week, Warsh, who served as a Fed governor during the financial crisis of 2008, said he would make changes to the way the Fed operates, including providing less "forward guidance" about monetary policy, reducing the size of the Fed's balance sheet, and reducing the scope of the Fed's activities.

-Diccon Hyatt

Fed Can Afford To Be Patient

April 29, 2026 12:08 PM EDT

The Fed is grappling with the still-unclear effects of the Iran war, whose energy price shock threatens to rekindle inflation. Just as hazy is whether the economy will falter if consumers start spending less, or whether growth will stay on track.

With little clarity on what’s ahead and the U.S. economy still solid, the Fed can be patient and keep rates steady, analysts say.

“The real economy continues to expand, stocks remain near record levels, and sticky pockets of inflation persist,” wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets. “It’s the ideal backdrop for the FOMC to keep policy rates unchanged until there is greater clarity.”

Markets anticipate the Fed will keep the federal funds rate at its target range of 3.5% to 3.75% for months. US-Iran peace talks stalled over the weekend, sending oil prices sharply higher this week as some saw rising risks of prolonged energy disruptions.

In recent days, Fed officials have expressed concern about inflation, noting that it never fully returned to the Fed’s 2% target after prices spiked in 2021 and 2022. Analysts viewed their inflation concerns as slightly hawkish, potentially making some Fed officials more hesitant about the rate cuts they’d penciled in for 2026 before the war began.

Jerome Powell speaking at a press conference following the last FOMC meeting on March 18. Anna Moneymaker / Getty Images

It’s a tone that Powell may adopt in his press conference.

“We expect Chair Powell to sound somewhat hawkish,” wrote Marc Giannoni, Barclays’ chief U.S. economist.  “We expect him to signal that the FOMC is in a holding pattern, which leaves it well positioned to address risks on both sides of the Fed's dual mandate.”

-Polo Rocha

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