Here’s everything to expect when the Fed issues its latest interest rate decision Wednesday
U.S. Federal Reserve Chairman Jerome Powell arrives for a press conference following the Federal Open Market Committee meeting at the Federal Reserve Board Building in Washington, DC on March 18, 2026.
Brendan Smialowski | Afp | Getty Images
Jerome Powell is expected to lead his fellow policymakers into another cautious pause at his final meeting as Fed chairman, with stubborn inflation and a resilient labor market leaving little room yet for rate cuts.
Wednesday’s decision will come against a backdrop of high energy prices, the central bank’s five-year run above its 2% inflation target, and a labor market that is weak but not distressed. This is not a recipe for relaxation, at least not yet.
“They would say we’re in a dual mandate, roughly stable labor market,” economist and former Fed vice chairman Roger Ferguson told CNBC. “On the inflation side of the mission, [there’s] There’s a lot more work to be done with sticky 3% [inflation rate]”And I hope they argue, ‘we’re going to sit around for a while longer to see how this plays out.'”
Similarly, Goldman Sachs economist David Mericle predicts that the post-meeting statement “will likely acknowledge better labor market news and higher inflation numbers, but will not change current policy guidance.” We expect a strong consensus to remain on hold for now, with only a single opposition, as was the case in March.
So with little drama surrounding the rate decision, markets 100% probability pricing With the FOMC on hold, attention will turn directly to Powell.
Unless the unexpected arises, the president’s designated successor, Kevin Warsh, appears likely to take over when Powell’s term ends in May.
The transition overshadows the usual signaling value of Powell’s post-meeting press conference.
inflation key
Normally a closely watched event for markets, Powell’s post-meeting press conference could be seen as a farewell speech for a central bank leader experiencing one of the current crises rather than a guide to future policy steps. the most contentious relationship with a president in the institution’s history.
“If Powell had stayed, I might have been trying to read more between the lines of what he said at the press conference,” said Jerry Tempelman, a former senior analyst at the New York Fed and now vice president of economic and fixed income research at Mutual of America Capital Management. “But given the fact that Kevin Warsh will likely soon be Fed chairman, all the language around it, etc., will probably become less relevant.”
In terms of communications, Tempelman expects the Fed to focus on inflation, which last stood at 3% excluding food and energy, using the central bank’s preferred indicator.
Crude oil prices are hovering around $100 per barrel, and the average gasoline price across the country is on the rise again. currently around $4.18 a gallonThis makes the Fed’s path even more complicated.
Although Fed officials often view such increases as temporary, they are also cautious about the long-term effects if conflicts in the Middle East escalate.
“Inflation continued to be well above everyone’s expectations and well above the Fed’s target,” Tempelman said. he said. “Everyone expects this to be Jay Powell’s last meeting. I also think there is little uncertainty about what the decision will be, so there will be no change in monetary policy at this meeting, and starting from the June meeting, the Fed will decide… under the chairmanship of Kevin Warsh.”
What will Powell do next?
However, this does not mean that Powell’s future will be determined. current chair He has the option to remain at the central bank for the final two years of his term as governor. So far he hasn’t given any clue as to what he will do.
He said at the meeting in March that he would not leave until the investigation into renovations at the Fed’s headquarters was completed. Jeanine Pirro, the U.S. attorney for the District of Columbia, referred the investigation to the Fed’s inspector general’s office; This was a move that politically paved the way for Warsh’s confirmation.
But it’s unknown whether that will satisfy the “truly over” bar Powell set for his departure in March.
“I’m not sure that moving this investigation away from the Department of Justice is going to be enough to put this behind us,” Ferguson said. “Was I sitting in his chair or [was one of] Advisors, I think we should clear things up.”
