The Federal Reserve has kept its benchmark rate unchanged at 3.5% to 3.75% in what is expected to be the final interest-rate decision of Jerome Powell's time as Federal Reserve chair. The decision to keep the key rate steady for the third meeting in a row came with an unusual level of dissent, CNBC reports. The Federal Open Market Committee was split 8-4, with Fed governor Stephen Miran favoring a quarter-point rate cut and three regional presidents who have warned about the dangers of inflation agreeing that the rate should be unchanged, but objecting to phrasing implying that the Fed's next move will be a cut. The Wall Street Journal reports the four dissents were the most since 1992.
- "Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook," the Fed said in its statement, per the AP. "Inflation is elevated, in part reflecting the recent increase in global energy prices."
Beyond remarks about policy, investors will be parsing Powell's words at a 2:30pm news conference for any hint about his future. His term as chair ends May 15, though he could remain on the Fed's board as a governor, CNBC reports. Also in focus: the man expected to take his place. The Senate Banking Committee on Wednesday advanced President Trump's nominee, former Fed governor Kevin Warsh, on a party-line vote, setting up a final confirmation vote in the GOP-controlled Senate. Warsh has argued in favor of rate cuts.
Analysts say that even with his pick in charge of the Fed, Trump may not get the lower rates he has pushed for, with Warsh just one of 12 votes on the committee. "Warsh is in the unfortunate position, through no fault of his own, to probably be the least influential Fed chair in a long time," Christopher Hodge, chief US economist at Natixis CIB, tells CNN. "He's going to have a really hard time convincing the other members of the (Fed's rate-setting committee) to cut rates quickly."
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