The Federal Reserve may be holding its last meeting under the Powell administration: interest rates are expected to remain unchanged, with the focus shifting to the power transition and persistent inflation.
2026-04-29 09:26:13
The Federal Reserve is set to announce its April monetary policy decision this Wednesday (April 29), which may be the last major meeting of current Chairman Jerome Powell during his tenure. Given the complex backdrop of persistent inflationary pressures, high energy prices, and a weak but not seriously problematic labor market, Fed policymakers are expected to maintain a cautious stance and refrain from adjusting benchmark short-term interest rates.
The decision-making environment for this meeting was quite delicate. On the one hand, U.S. energy prices remained high, with crude oil prices hovering around $100 per barrel and the national average gasoline price rising to about $4.18 per gallon. On the other hand, the Fed's preferred core inflation gauge (excluding food and energy) remained stable at around 3%, well above the long-term target of 2%, and this excess had persisted for five years. Meanwhile, while the labor market had slowed to some extent, it had not yet fallen into significant trouble. This combination of "stubborn inflation and relatively stable employment" made it difficult for the Fed to launch an easing policy in the short term.
Former Federal Reserve Vice Chairman and economist Roger Ferguson pointed out in an interview that under the dual mandate framework, the Fed may believe the labor market is broadly stable, but there is still much work to be done regarding inflation. He expressed hope that policymakers would clearly convey the signal that "we need to wait and see how things develop." Goldman Sachs economist David Merrickel also expects the post-meeting statement to acknowledge the positive news in the labor market and the rise in inflation data, but not to change existing policy guidance. The market widely expects the Fed to maintain interest rates unchanged with strong consensus, possibly with only one dissenting voice, similar to the situation at the March meeting.
Since the interest rate decision itself is almost a foregone conclusion—the market has already fully priced in the Fed holding rates steady—the public and investors’ attention will be entirely focused on Powell’s own future moves.
Inflation is undoubtedly the key issue at this meeting and in the future policy direction. Federal Reserve officials typically tend to view short-term spikes in oil and gasoline prices as temporary, but they remain highly vigilant about the potential for escalating conflict in the Middle East and its long-term impact. Latest data shows that core inflation remains stubbornly at 3%, far exceeding earlier market and Fed expectations, further complicating policy adjustments.
Jerry Templeman, vice president of economics and fixed income research, believes that from a communication strategy perspective, the Federal Reserve is likely to focus on inflation this time. He points out that although it is widely believed that this will be Jay Powell's last meeting, there is almost no uncertainty regarding monetary policy, and no changes will be made at this meeting. Starting from the June meeting, Kevin Warsh is expected to officially take over as chairman of the Federal Reserve.
Powell's post-meeting press conference was originally a closely watched window for important signals. However, given the impending power transition, this press conference may be seen more as a farewell speech by a central bank leader with a controversial relationship with the president, rather than a clear indication of future policy direction. Templeman stated that if Powell remains in office, people might interpret the subtext of his remarks more carefully; but with Kevin Warsh poised to take over, the signaling significance of his surrounding language and wording will be significantly reduced.
Although Kevin Walsh has been designated as his successor and the power transition appears to be on track, Powell's personal future remains uncertain. According to regulations, the current chairman has the right to remain in office for the final two years of their term. As of now, Powell has not made a clear statement on this matter.
At the March meeting, he stated that he would only consider leaving after the investigation into the overhaul of the Federal Reserve headquarters was completely concluded. Jeanne Piro, the U.S. Attorney for the District of Columbia, has transferred the investigation to the Federal Reserve's Office of the Inspector General, a move that politically cleared the way for Warsh's confirmation. However, former Federal Reserve Vice Chairman Ferguson believes that transferring the investigation from the Department of Justice to another agency does not necessarily fully meet Powell's standard of a "truly and completely concluded" conclusion. He suggests that if he were Powell or an advisor to him, he would not easily signal that "everything is safe."
Overall, the Federal Reserve meeting is expected to maintain the status quo in terms of policy, keeping interest rates stable to address persistent inflationary pressures and high energy costs. However, on the personnel front, this meeting may mark the end of an era – the Powell era is drawing to a close, and the direction of Fed policy under Kevin Warsh will become a key focus for the market. Investors and observers need to pay close attention to Powell's statements at the press conference, as well as any clues regarding his future, while interest rates remain unchanged. This information may provide important clues about the evolution of future monetary policy.
Amidst heightened global economic uncertainty, every move by the Federal Reserve is closely watched by the market. While this meeting did not feature any drastic policy changes, the power transition and inflationary struggles behind it still warrant close attention.
Meeting Background: Cautious Suspension Remains the Main Choice
The decision-making environment for this meeting was quite delicate. On the one hand, U.S. energy prices remained high, with crude oil prices hovering around $100 per barrel and the national average gasoline price rising to about $4.18 per gallon. On the other hand, the Fed's preferred core inflation gauge (excluding food and energy) remained stable at around 3%, well above the long-term target of 2%, and this excess had persisted for five years. Meanwhile, while the labor market had slowed to some extent, it had not yet fallen into significant trouble. This combination of "stubborn inflation and relatively stable employment" made it difficult for the Fed to launch an easing policy in the short term.
Former Federal Reserve Vice Chairman and economist Roger Ferguson pointed out in an interview that under the dual mandate framework, the Fed may believe the labor market is broadly stable, but there is still much work to be done regarding inflation. He expressed hope that policymakers would clearly convey the signal that "we need to wait and see how things develop." Goldman Sachs economist David Merrickel also expects the post-meeting statement to acknowledge the positive news in the labor market and the rise in inflation data, but not to change existing policy guidance. The market widely expects the Fed to maintain interest rates unchanged with strong consensus, possibly with only one dissenting voice, similar to the situation at the March meeting.
Since the interest rate decision itself is almost a foregone conclusion—the market has already fully priced in the Fed holding rates steady—the public and investors’ attention will be entirely focused on Powell’s own future moves.
Inflation remains the core constraint.
Inflation is undoubtedly the key issue at this meeting and in the future policy direction. Federal Reserve officials typically tend to view short-term spikes in oil and gasoline prices as temporary, but they remain highly vigilant about the potential for escalating conflict in the Middle East and its long-term impact. Latest data shows that core inflation remains stubbornly at 3%, far exceeding earlier market and Fed expectations, further complicating policy adjustments.
Jerry Templeman, vice president of economics and fixed income research, believes that from a communication strategy perspective, the Federal Reserve is likely to focus on inflation this time. He points out that although it is widely believed that this will be Jay Powell's last meeting, there is almost no uncertainty regarding monetary policy, and no changes will be made at this meeting. Starting from the June meeting, Kevin Warsh is expected to officially take over as chairman of the Federal Reserve.
Powell's post-meeting press conference was originally a closely watched window for important signals. However, given the impending power transition, this press conference may be seen more as a farewell speech by a central bank leader with a controversial relationship with the president, rather than a clear indication of future policy direction. Templeman stated that if Powell remains in office, people might interpret the subtext of his remarks more carefully; but with Kevin Warsh poised to take over, the signaling significance of his surrounding language and wording will be significantly reduced.
Powell's future remains uncertain.
Although Kevin Walsh has been designated as his successor and the power transition appears to be on track, Powell's personal future remains uncertain. According to regulations, the current chairman has the right to remain in office for the final two years of their term. As of now, Powell has not made a clear statement on this matter.
At the March meeting, he stated that he would only consider leaving after the investigation into the overhaul of the Federal Reserve headquarters was completely concluded. Jeanne Piro, the U.S. Attorney for the District of Columbia, has transferred the investigation to the Federal Reserve's Office of the Inspector General, a move that politically cleared the way for Warsh's confirmation. However, former Federal Reserve Vice Chairman Ferguson believes that transferring the investigation from the Department of Justice to another agency does not necessarily fully meet Powell's standard of a "truly and completely concluded" conclusion. He suggests that if he were Powell or an advisor to him, he would not easily signal that "everything is safe."
Summary: A potential turning point emerges amidst cautious observation.
Overall, the Federal Reserve meeting is expected to maintain the status quo in terms of policy, keeping interest rates stable to address persistent inflationary pressures and high energy costs. However, on the personnel front, this meeting may mark the end of an era – the Powell era is drawing to a close, and the direction of Fed policy under Kevin Warsh will become a key focus for the market. Investors and observers need to pay close attention to Powell's statements at the press conference, as well as any clues regarding his future, while interest rates remain unchanged. This information may provide important clues about the evolution of future monetary policy.
Amidst heightened global economic uncertainty, every move by the Federal Reserve is closely watched by the market. While this meeting did not feature any drastic policy changes, the power transition and inflationary struggles behind it still warrant close attention.
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