Change is arriving at the Federal Reserve even as interest rates are expected to remain unchanged.
The Fed is widely expected to hold its benchmark rate steady at Wednesday’s policy meeting, which could be Jerome Powell’s final one as chair. The Senate Banking Committee is set to vote that day on President Trump’s nominee to succeed him, Kevin Warsh, a step that could lead to full Senate confirmation in time for a transition when Powell’s term expires next month.
A potential delay to that timetable recently eased. Sen. Thom Tillis, R-N.C., had threatened to block a vote in protest of a Justice Department probe of the Fed — part of a broader White House campaign pressuring the central bank toward lower rates. The apparent impasse was removed last Friday when federal prosecutors agreed to drop the investigation. Tillis told NBC’s Meet the Press he was then “prepared to move on with the confirmation of Mr. Warsh,” calling him a candidate he expects would be a strong Fed chair.
Warsh has argued there is room to lower rates without stoking inflation, citing productivity gains from artificial intelligence as a factor. At his confirmation hearing he stressed he would act independently, saying the president never asked him to commit to specific rate cuts and that he would not take direct orders.
Even if the chair favors cuts, policy is decided by the 12-member Federal Open Market Committee and the chair has a single vote. Several committee members have signaled caution about reducing rates while inflation remains elevated, and recent geopolitical tensions — including the war with Iran — have lifted energy prices and complicated the outlook.
Powell could remain on the Fed’s governing board after his chairmanship ends; although his term as chair is expiring, his seat on the board would extend through 2028. That would be unusual, since most chairs step down entirely when their terms end. Powell has been a vocal defender of Fed independence and said he would weigh staying based on what he believes is best for the institution and the public.
Powell is expected to address reporters at the conclusion of Wednesday’s meeting, possibly for the last time as Fed chair.