Powell’s Last Stand? Fed Holds Steady as Warsh Waits in the Wings

CNN, NBC News, Forbes, and Reuters contributed to this report.

The Federal Reserve is expected to hit pause again on interest rates Wednesday. No surprises there. What’s drawing attention is who’s in charge – and for how much longer.

Jerome Powell is heading into what could be his final meeting as chair before his term wraps up in mid-May. And while the rate decision itself looks straightforward, the bigger question hanging over the room is what Powell does next. Walk away? Stick around as a governor? He hasn’t said.

Meanwhile, Kevin Warsh is inching closer to taking over. His nomination, backed by Donald Trump, is moving through the Senate, with a key committee vote expected to push things toward final approval. The path cleared after a Justice Department probe tied to the Fed was shut down – at least for now.

Markets aren’t expecting fireworks from this meeting. Rates are widely projected to stay put, hovering in their current range. No fresh economic projections either. Investors have already priced that in.

Still, Powell has a tricky backdrop to address. The economy isn’t exactly calm.

Oil prices have surged sharply this year, driven by the ongoing conflict involving Iran. That’s feeding into inflation, which is already running hotter than the Fed would like. Add in tariff uncertainty and rapid changes tied to artificial intelligence, and policymakers are juggling a messy mix of risks.

The labor market isn’t offering much clarity either. Hiring has swung from solid gains to sudden losses and back again in just a few months. Stable on the surface, maybe – but not exactly reassuring.

Expect Powell’s press conference to lean heavily on uncertainty. Officials are still trying to figure out how much the geopolitical chaos will spill into the broader economy. There’s no clear playbook.

Behind the scenes, there’s also the lingering shadow of that investigation into the Fed. Even though it’s been formally closed, some signals from Washington suggest it could resurface. That uncertainty might factor into Powell’s decision about whether to remain on the board after stepping down as chair – a rare move, but not impossible.

For now, traders are betting on continuity. No rate cuts yet. Maybe later, if inflation cools and the job market softens. But that’s a big “if.”

So Wednesday isn’t really about what the Fed does. It’s about who’s steering it next – and what kind of economy they’re about to inherit.