Uncertainty around the economic outlook and a leadership transition at the US central bank loom large over this week's meeting of Federal Reserve officials, who are expected to leave interest rates unchanged on Wednesday.
A jump in energy prices and disruption to supply chains stemming from the Iran war have raised the possibility of stronger inflation and weaker economic growth, prompting policymakers to signal they're comfortable in wait-and-see mode for now. The Federal Open Market Committee is poised to hold its benchmark interest rate in a range of 3.5% to 3.75% for a third consecutive meeting.
In what's likely to be Jerome Powell's final press conference as Fed chair, investors will be looking for clues about how long they're willing to maintain their patient posture.
| More intriguing, however, may be what Powell says about his future at the central bank. The current chief has suggested he may remain as a member of the Fed's Board of Governors after his chair term ends on May 15. Officials will release their post-meeting statement at 2 p.m. Wednesday in Washington, with Powell's press conference to follow 30 minutes later. Political Plot TwistPowell is almost certain to face questions about how recent political developments might affect his decision to depart or remain at the Fed. That's being closely followed, given the immense pressure President Donald Trump has placed on the central bank for steep rate cuts, and vows from Kevin Warsh - the president's pick to be the next chair - to bring "regime change" to the Fed. "The question is how fast he will be able to change the Fed," analysts at Evercore ISI wrote in a recent research note, referring to Warsh. "This will depend in part on how fast the board and FOMC turn over - including whether Powell quits as governor." ALSO READ: US-Iran War; Fed, 8th Pay Commission Meetings; Q4 Results & More — The Week Ahead In a major turn of events, Sen. Thom Tillis said Sunday he'll vote to advance Warsh's nomination out of the Senate Banking Committee, clearing the path for his confirmation. Tillis dropped his pledge to hold up the nomination after the Department of Justice said it was closing an investigation into Powell and the Fed over a $2.5 billion renovation of the central bank's headquarters. Tillis and other lawmakers have criticized the investigation as politically motivated. Powell, whose term as governor runs to January 2028, has said he wouldn't leave until the investigation is "well and truly over, with transparency and finality." It's unclear whether the DOJ has met those criteria. In announcing the end of the probe, the US Attorney for the District of Columbia, Jeanine Pirro, said she asked the Fed's internal watchdog to examine the construction project. She also promised to restart a criminal investigation "should the facts warrant doing so." Statement TweaksFed watchers aren't expecting major changes to policymakers' statement from March, but point to a few possible tweaks. For example, officials could adjust their description of the labor market to acknowledge recent data suggesting that, despite low hiring, the labor market has stabilized, economists said. Some officials have also wanted the Fed to make clear the next policy move could be a rate hike - and not a cut - with the conflict in Iran adding to existing inflation pressures. To hint at that sentiment, officials could tinker with language describing how officials considered "the extent and timing of additional adjustments" to their benchmark rate. "Hawkish versions of the statement could drop 'additional,' which indicates a dovish bias by implicitly signaling the continuation of a series of rate cuts," economists at Deutsche Bank wrote in a note. The Fed lowered rates three times in late 2025. Fed Governor Stephen Miran may dissent against the majority's decision, as he has at every meeting since joining the Fed last September. This could also be Miran's last policy meeting, as Warsh has been nominated to fill his seat. ALSO READ: Trump Administration Drops Criminal Inquiry Against Jerome Powell In Fed Building Renovation Case |
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.