The central bank kept the federal funds rate target range at 3.5% to 3.75%, saying in its latest policy statement that economic activity is expanding at a solid pace while inflation remains elevated, partly because of higher global energy prices. Officials also said developments in the Middle East are adding “a high level of uncertainty” to the outlook.
Federal Reserve holds steady as dissent widens
The rate decision exposed an unusually divided committee. Eight officials backed the hold, while four dissented. Gov. Stephen Miran favored a quarter-point cut, while Beth Hammack, Neel Kashkari and Lorie Logan supported keeping rates unchanged but objected to language that kept an easing bias in the statement.
That split made the meeting the most divided since 1992, according to a Reuters market analysis. It also complicates Warsh’s path if he is confirmed, because the incoming chair would inherit a committee that is not clearly aligned around faster cuts.
Inflation data explain the caution. The Consumer Price Index rose 0.9% in March and 3.3% from a year earlier, while energy prices jumped 10.9% for the month and gasoline rose 21.2%, the Bureau of Labor Statistics said in its March CPI report. Those figures keep pressure on policymakers who want more evidence that inflation is moving sustainably toward the Fed’s 2% target.
Powell stays as the Federal Reserve prepares for Warsh
Powell said he would remain a governor after his term as chair ends in May, a decision that preserves his voice on the board and limits the immediate scope of a personnel reshuffle. He also said he would not act as a “shadow chair” and would try to support Warsh where possible, according to his post-meeting comments.
Powell’s separate term as governor runs until Jan. 31, 2028, according to his Federal Reserve History profile. That gives him legal room to stay even after surrendering the chairmanship, though his exact timeline remains uncertain.
Warsh moved closer to the top job when the Senate Banking Committee advanced his nomination to the full Senate. The committee said Warsh, President Donald Trump’s pick to serve as governor and chair, now heads to the Senate floor after the panel’s April 29 vote.
Old battles frame the new Federal Reserve test
The moment carries echoes of earlier Fed fights. Trump first elevated Powell in 2017, choosing him as a centrist option expected to continue Janet Yellen’s cautious approach, as Reuters reported at the time. Within a year, however, Trump was publicly pressing the central bank for easier policy, saying the Fed should give him “some help” during trade negotiations, according to a 2018 Reuters interview.
The Fed’s policy arc has been just as dramatic. In March 2020, the central bank slashed rates near zero and launched large bond purchases to protect the economy during the coronavirus shock, AP reported during the emergency move. Four years later, after inflation had cooled, Powell led a half-point rate cut to begin an easing cycle, according to Reuters coverage of the September 2024 decision.
That history helps explain why the current transition matters. Powell’s Fed is no longer fighting the pandemic collapse, but it is still managing the aftershocks of inflation, rate hikes and political pressure. Warsh, meanwhile, has criticized the central bank’s past inflation response and is expected to push for changes in how the institution communicates and manages policy.
What comes next for rates and credibility
The next test is whether Warsh, if confirmed, can build consensus without appearing to bend the Federal Reserve toward the White House. Markets are already watching whether the Fed’s next move is a cut, a prolonged hold or, if inflation expectations worsen, a renewed discussion of tighter policy.
For households and businesses, the immediate message is that borrowing costs are unlikely to fall quickly. Mortgage rates, credit card costs and business loans remain tied to expectations for future Fed policy, and a split committee gives investors little reason to assume rapid relief.
The larger question is institutional. Powell’s decision to stay, the divided rate vote and Warsh’s advance create a rare overlap of old and new leadership. How the Federal Reserve manages that overlap may determine whether markets see the transition as orderly — or as the start of a more turbulent fight over the central bank’s independence.
