Jerome Powell Delivers Likely Last Speech, Rates Unchanged

• The Federal Reserve held rates steady at 3.5% to 3.75% for a third straight meeting.
• The 8-4 vote marked the highest number of Fed dissents since October 1992.
• Rising oil prices tied to the Iran war kept inflation risks high and delayed cut hopes.

The US Federal Reserve left interest rates unchanged at 3.5% to 3.75% after its April policy meeting, matching market expectations. This was the third straight meeting with no change in rates.

Meanwhile, the markets had fully priced in a hold before the decision. The Federal Open Market Committee voted 8-4 to keep rates steady, the highest number of dissenting votes since October 1992.

One official, Stephen Miran, backed a 25 basis point cut. Beth Hammack, Neel Kashkari, and Lorie Logan supported holding rates but opposed language that still pointed to possible future easing.

Inflation and Oil Prices Keep Pressure on the Fed

The Fed said inflation remains elevated, partly due to rising global energy prices. The pressure increased after the Iran war pushed oil sharply higher.

Brent crude jumped more than 6% to settle at $118.03 per barrel. After the settlement, it briefly touched $120.27, the highest level since 2022. WTI crude rose nearly 7% to $106.88 per barrel, its first close above $100 in three weeks.

Chair Jerome Powell said the economic outlook remains highly uncertain and that the Middle East conflict added to that uncertainty.

On the other hand, bond markets reacted quickly while treasury yields moved higher as traders reduced expectations for near-term rate cuts and priced in a higher-for-longer policy.

Powell Gives Likely Final Press Conference as Chair

Powell’s term as Fed chair ends on May 15. His press conference after Wednesday’s meeting was his final scheduled appearance before reporters as chair.

He may remain on the Board of Governors until January 2028, though former chairs rarely stay after leaving the top role.

Kevin Warsh, President Donald Trump’s nominee to replace Powell, cleared the Senate Banking Committee and now moves to a full Senate vote.

Powell’s Legacy: Late Hikes, Soft Landing

Powell’s time as chair included two major tests. When COVID hit, the Fed cut rates to zero and launched emergency lending programs to stop credit markets from freezing.

Later, the Fed was criticized for waiting until March 2022 to begin rate hikes even as inflation surged. Critics said the delay forced more aggressive tightening later. Still, the expected recession never arrived.

Inflation cooled without a deep downturn, giving Powell one of the rare soft landings central banks often fail to deliver. When asked recently about his legacy, Powell brushed it off, saying it was for others to judge.

Related: Fed Independence in Focus as Kevin Warsh Grilled by Lawmakers