What we're covering here
• As expected: For the third time this year, the Federal Reserve said it is holding interest rates at their current range of 3.5% to 3.75%. However, four Fed officials dissented from the consensus, the most in 34 years.
• Last stand: Fed Chair Jerome Powell is finishing up his last few days as head of the US central bank, with his term expiring May 15. His press conference this afternoon at 2:30 p.m. will likely mark his final appearance before reporters as Fed chair.
• Next in line: Kevin Warsh, who is President Donald Trump’s pick to succeed Powell, cleared a key hurdle Wednesday and his nomination now advances to the full Senate for final approval.
• Your move: The Fed has held pat on interest rates all year, citing uncertainty from the Trump administration’s policies and the conflict in the Middle East. Trump has said he expects his new chair to cut rates.
Stocks dip, yields rise after Fed holds rates steady
US stocks slightly extended losses after the Federal Reserve announced it held interest rates steady, matching expectations.
The Dow was down 422 points, or 0.86%. The S&P 500 fell 0.4%, and the Nasdaq Composite fell 0.45%.
“Inflation is elevated, in part reflecting the recent increase in global energy prices,” the Fed said in a statement.
Treasury yields ticked higher: The two-year yield, which is sensitive to the outlook for Fed rates, moved higher, to 3.94% and hit its highest level in a month.
The 10-year yield, which is sensitive to the outlook for inflation, rose to 4.42%, also its highest level in a month.
The US dollar index rose 0.3%. Expectations for higher-for-longer interest rates can support the dollar.
Traders focus now turns to Federal Reserve Chair Jerome Powell’s remarks at a 2:30 p.m. ET press conference.
Dissents underscore difficulty for next Fed chair to lower rates
While Kevin Warsh, President Donald Trump’s nominee to succeed Federal Reserve Chair Jerome Powell, may favor lower rates, there currently isn’t a convincing economic argument for easier monetary policy anytime soon – a view that three key Fed voters telegraphed at this meeting.
The decision to hold steady was nearly unanimous, with only Fed Governor Stephen Miran casting a dissenting vote in favor of lower rates than the majority wants for the sixth consecutive meeting.
But Fed presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas “did not support inclusion of an easing bias in the statement at this time.”
Their dissents underscore how difficult it will be for Warsh, if he’s confirmed, to persuade the majority of the Fed’s 12-person rate-setting committee to go along with lower rates. While the Fed chair wields considerable influence, controlling the agenda for every Fed meeting, they have only one vote in a committee that makes consensus-based decisions.
It is the first time since October 1992 that there have been four dissents of any kind.
Fed holds interest rates steady for third time this year
The Federal Reserve on Wednesday kept interest rates unchanged for a third consecutive meeting, with some policymakers citing still-elevated energy prices due to the US-Israeli war with Iran.
Fed officials kept the benchmark lending rate in a range of 3.5-3.75%, in what is expected to be Jerome Powell’s final meeting as chair before his term ends on May 15.
Kevin Warsh, President Donald Trump’s nominee to succeed Powell, is widely expected to favor additional rate cuts this year.
Warsh continues to deny involvement with Jeffrey Epstein
Kevin Warsh, President Donald Trump’s pick to succeed Federal Reserve Chair Jerome Powell, continues to deny any ties with disgraced financier and convicted sex offender Jeffrey Epstein.
“I don’t know these people, I did not attend any of their events, nor am I aware of having ever attended an event at which these people were present,” Warsh stated in response to questions posed by Massachusetts Sen. Elizabeth Warren, who penned a letter to the Fed nominee last month demanding more details about the extent of his relationship with Epstein.
Emails sent to or from an account associated with Epstein released by the Department of Justice suggest Warsh and his wife, Jane Lauder, were invited to events Epstein helped organize.
One was in St. Barthélemy around Christmas in 2010; another was a dinner in New York. The guest list for the dinner includes Epstein, Warsh, Lauder, Trump and his wife Melania, and some of the president’s children.
It’s unclear from the batch of email exchanges released in January who attended the events. Trump has consistently denied any wrongdoing and being mentioned in the files is not an indication of that.
Why Elizabeth Warren called Warsh a "sock puppet" — and what he said in response
Last week in his initial Federal Reserve chair Senate confirmation hearing, Democratic Sen. Elizabeth Warren labeled Kevin Warsh a “sock puppet” of President Donald Trump.
The label, she said, stemmed from Trump’s recent comment that he believed interest rates would be lower “when Kevin gets in.”
Trump has not been shy about his desire for the Fed to lower interest rates and he wants to exert greater control over the independent central bank. But Fed Chair Jerome Powell has stood firm by the bank’s policy to keep politicians’ views out of interest rate decisions, drawing the ire of Trump.
That has led many to believe that Trump’s pick to replace Powell would be more accommodating of the president’s demands. But Warsh told senators last week that wouldn’t be the case.
Asked by a Republican senator later if he’d be the president’s “human sock puppet,” Warsh responded, “Senator, absolutely not.” He also vowed to be “an independent actor, if confirmed.” However, he was unwilling to state whether or not Trump won the 2020 election.
Tillis slams Warren's insistence that investigation into Powell isn't over as an "insult"
Sen. Thom Tillis told CNN that he was insulted by Sen. Elizabeth Warren’s insistence that the investigation into Federal Reserve Chair Jerome Powell isn’t over, after Tillis said he was assured by the Justice Department that it was ending.
Tillis had refused to join his GOP colleagues in advancing Trump’s Fed chair nominee, Kevin Warsh, until the investigation into Powell ended.
“Sen. Warren did nothing but a political stump speech in there. She does not know anything about this. I do because I spent hours with the DOJ negotiating this, and I’m fine, but call it what it is: it’s political theater, not based on fact,” said Tillis.
He continued, “And that’s an insult to me. She’s basically saying what I decided was okay to go forward with was all bogus. She wasn’t in those discussions. She didn’t get the assurances that I did.”
Warren maintained that “a vote to advance Donald Trump’s Fed nominee is a vote to help Donald Trump take over the Fed. We should not be advancing Kevin Warsh today,” before the Senate Banking Committee meeting where the panel approved his nomination.
She maintained to reporters that the investigation into Powell “has not been dropped.”
The Fed under Warsh might not meet eight times a year any more
President Donald Trump’s nominee to lead the Federal Reserve expressed a willingness last week to consider holding fewer monetary policy meetings, a break from a nearly 50-year practice.
Since the 1980s, the Fed has held eight meetings a year, occurring roughly every six weeks, to vote on the appropriate level of interest rates. By law, though, central bankers are only required to have four such meetings.
Warsh told senators on the banking committee during his confirmation hearing last week that “four (meetings) is not enough, so having more meetings than that is appropriate.” At the same time, he didn’t commit to holding eight meetings a year.
He did, however, seem to agree to hold post-meeting press conferences. “If a press conference were held, I think it would be incumbent to hear what the reporters of the day had in mind,” Warsh said.
Bringing down rates isn't going to be easy
Kevin Warsh, President Donald Trump’s pick to lead the Federal Reserve, is now firmly on track to assume one of the most powerful positions in the global economy — and could advance an agenda that aligns with Trump’s desire for lower rates.
Still, even with Warsh at the helm, it won’t be easy to push interest rates meaningfully lower, something the president has made clear he wants, even joking that he would sue Warsh if he doesn’t cut rates.
That’s because Fed officials typically lower borrowing costs only if inflation is slowing, unemployment is rising (and at risk of climbing higher), or a combination of the two — neither of which is happening.
And since the Fed chair is just one vote on the 12-person rate-setting committee, Warsh would be unlikely to build consensus for a rate cut.
“Warsh is in the unfortunate position, through no fault of his own, to probably be the least influential Fed chair in a long time,” Christopher Hodge, chief US economist at Natixis CIB, told CNN. “He’s going to have a really hard time convincing the other members of the (Fed’s rate-setting committe) to cut rates quickly.”
Here’s what Wall Street expects from the Fed
Stocks were slightly lower Wednesday ahead of the Federal Reserve’s decision on interest rates.
The Dow was down 268 points, or 0.55%. The S&P 500 and Nasdaq each fell 0.1%.
Here’s what economists and investors expect from the Fed and Chair Jerome Powell this afternoon:
- “With uncertainty still pervasive, we expect [Powell] will emphasize that officials are unsure of the precise fallout from the war on the economy and monetary policy.” — Matthew Luzzetti, chief US economist at Deutsche Bank. “However, Powell could highlight that persistent price pressures become more likely the longer oil prices remain elevated.”
- “Energy prices shot up in March, which at the margin will be negative for growth and employment and a boost to inflation, exacerbating the two conflicting risks that were already the focus of policymakers.” — Stephen Stanley, chief US economist at Santander US Capital Markets. “The easy thing to do for the [Fed] is to simply move to the sidelines for a time and wait for events to play out.”
- “Markets will be watching closely for any signal from Chair Powell regarding whether he intends to remain on the Committee following the confirmation of his successor, as that could shape expectations around policy continuity.” — Chris Brigati, chief investment officer at SWBC.
Tillis: DOJ gave "assurances" that Powell's criminal investigation is over
Republican Sen. Thom Tillis planned to block Kevin Warsh’s Federal Reserve chair nomination from advancing out of the Senate until the Department of Justice dropped a criminal investigation into current Fed Chair Jerome Powell.
Since the DOJ announced last week it would do so until further notice, he gave his necessary stamp of approval for Warsh on Wednesday.
However, there have been some concerns, especially from Democrats, about US Attorney for the District of Columbia Jeanine Pirro’s comments last week that she “will not hesitate to restart a criminal investigation should the facts warrant doing so.”
After casting a “yes” vote for Warsh Wednesday, putting him up for a full Senate vote, which has yet to be scheduled, Tillis said he was given “assurances” from the DOJ that the criminal investigation is over.
Warsh vowed to uphold Fed independence if confirmed — but eyes big changes
During his confirmation hearing before the Senate Banking Committee for the Federal Reserve chair role last week, Kevin Warsh vowed to uphold the central bank’s longstanding independence and said he would “absolutely not” be a “sock puppet” for the president, as Sen. Elizabeth Warren termed it.
Warren repeated that accusation Wednesday during the confirmation vote for Warsh’s nomination, adding that “Trump has not been subtle about his takeover” of the independent central bank and its monetary policy.
Warsh has said he plans to overhaul many parts of the Fed as we’ve come to know it over the past few decades.
Those changes include “a regime change in the conduct of policy” and a new “inflation framework,” he told members of the committee last week.
Currently, the central bank targets 2% annual inflation, though it has fallen short of that goal for the past five years. Warsh didn’t share exactly what his new structure may look like.
Meet Powell's likely sucessor
President Donald Trump is one step closer toward getting Kevin Warsh, his pick for Federal Reserve chair, in place at the head of the central bank, after the Senate Banking Committee voted Wednesday to advance Warsh’s nomination.
So, who exactly is Warsh?
Warsh, 56, was appointed to the Fed’s Board of Governors in 2006 by then-President George Bush, serving in the position during the height of the Great Recession.
He took on a special role as chief liaison to Wall Street. In that role, he helped coordinate the sale of Bear Stearns to JPMorgan Chase, while at the same time allowing Lehman Brothers to go under. Warsh resigned from the Fed in 2011 after publicly voicing his opposition to the central bank’s plan to buy $600 billion worth of bonds to inject more money into the economy.
Before that, he was an investment banker at Morgan Stanley, advising major financial firms and building relationships across Wall Street that would later shape his role at the Fed.
He’s maintained close ties with Trump as well as several prominent Republicans and was considered for Fed chair during Trump’s first term before the president ultimately selected Powell.
Beyond Washington, Warsh is closely connected to the Estée Lauder Companies through his marriage to Jane Lauder, an heir to the cosmetics empire and a senior executive at the company.
Treasury yields climb as US oil hits $105 per barrel
The bond market is signaling concern about oil prices and inflation — and it’s leading to higher borrowing costs.
US Treasury yields just hit their highest level since March on Wednesday while US and global crude oil prices hit $105 and $117 per barrel, respectively.
Yields are rising as investors digest the oil shock and adjust expectations for inflation and higher-for-longer interest rates. Yields rise when bond prices fall.
Higher yields translate into higher borrowing costs across the economy, from more expensive mortgage rates to making it costlier for the government to manage the national debt.
The yield on the 30-year US Treasury traded at 4.98% Wednesday morning. The 10-year Treasury yield hit 4.4%.
Senate Banking Committee votes to advance Kevin Warsh's nomination for Fed chair
Kevin Warsh, President Donald Trump’s nominee to succeed Federal Reserve Chair Jerome Powell, advanced out of the Senate Banking Committee on Wednesday morning.
Warsh will now face a full Senate vote, though it’s not yet clear when that will take place. Powell’s four-year term at the helm of the central bank expires on May 15.
Exclusive: Senate Democrats press Warsh to provide further detail on his conversations with Trump
A group of Democratic senators are requesting Kevin Warsh, President Donald Trump’s nominee for Federal Reserve chair, to clarify any conversations he has had with the president on monetary policy, according to a letter first shared with CNN.
Eight out of the 11 Democrats on the Senate Banking Committee, which approves Fed nominees, signed on to the letter, claiming that statements Warsh made during his confirmation hearing last week “appear to directly contradict public reporting, including public comments made by President Donald Trump.”
The senators are requesting Warsh respond to a series of questions, largely to confirm that his congressional testimony was truthful and to reiterate that he believes any account to the contrary is inaccurate.
Warsh was pressed during his hearing by several senators from both sides of the aisle to disclose any conversation he’s had with the president on interest rates. Trump has long demanded rate cuts, and has said he fully expects his pick for Fed chair to push for lower rates.
Warsh repeatedly said Trump never asked him to commit to moving rates one way or the other. For example, in one exchange with Republican Sen. John Kennedy of Louisiana, Warsh said: “The president never once asked me to commit to any particular interest rate decision. Period. And nor would I ever agree to do so if he had.”
However, Democratic Sen. Ruben Gallego of Arizona pointed to reporting from The Wall Street Journal stating that “the president pressed Warsh on whether he could trust him to support interest-rate cuts if he were chosen to lead the central bank.” Warsh repeated that he was never asked to make any commitments.
Warsh expected to advance one step further to Fed chairmanship today
Kevin Warsh, President Donald Trump’s nominee to succeed Federal Reserve Chair Jerome Powell, is expected to receive the necessary 13 votes from senators on the banking committee, putting him one step closer toward becoming the new chair.
The 24-person committee is set to hold a vote at 10 a.m. ET to determine whether Warsh’s nomination can advance to the full Senate.
Had the vote been held at this time last week, Warsh would have been unlikely to have the necessary support, since Republican Sen. Thom Tillis vowed to block him from advancing until the Department of Justice dropped a criminal investigation into Powell. That probe was dropped last week, paving the way for Warsh’s next step. Tillis said last weekend that he would give his crucial stamp of approval.
While it’s unclear when a full Senate vote will occur, it’s likely to happen before May 15, when Powell’s term as chair ends.
Supreme Court could rule today on Trump's attempt to fire Lisa Cook
The Supreme Court is expected to announce rulings at 10 a.m. ET on a number of cases in its docket, one of them being Federal Reserve Governor Lisa Cook’s lawsuit to keep her job. President Donald Trump attempted last year to fire Cook, based on allegations that she had committed mortgage fraud.
However, it’s never known which rulings will be handed down on decision days, and the court has multiple other cases to work through.
Trump v. Cook is the most consequential legal case for the Fed in its 112-year history, as it could either uphold or deal a fatal blow to the US central bank’s political independence.
Trump announced Cook’s firing on social media, posting a letter that accused Cook of “deceitful and potentially criminal conduct” because she claimed two different homes as her primary residence in 2021. She has denied any wrongdoing and has called the charges “manufactured.”
Cook, who was appointed by President Joe Biden in 2022, sued three days later.
A federal court in temporarily blocked Cook’s removal, finding that Trump had not identified anything relating to her conduct in her job to indicate she was harming the public. An allegation of wrongdoing before she took office, the court reasoned, didn’t count as cause. A federal appeals court in Washington, DC, declined to put that order on hold and it reasoned that officials like Cook have a right to due process before being fired for cause.
Trump filed an emergency appeal at the Supreme Court in September.
While Trump has argued that Cook’s firing was about public trust in government officials, critics say the mortgage allegations were a pretext for the president’s real goal: gaining control over an independent agency he has long criticized for not moving aggressively enough to lower interest rates.
Stocks open slightly lower ahead of Fed rate decision
US stocks opened lower Wednesday morning ahead of the Federal Reserve’s decision on interest rates, set to be announced at 2 p.m. ET.
The Dow fell 120 points, or 0.24%. The S&P 500 fell 0.2%, and the tech-heavy Nasdaq Composite fell 0.4%.
Traders expect the Fed to hold rates steady for the third meeting in a row. Policymakers are observing the impact of the Iran war on inflation and economic growth.
“With oil prices still elevated and this likely being Jerome Powell’s last meeting, the market sees zero doubt that the Fed will keep rates unchanged on Wednesday,” Dennis Follmer, CIO at Montis Financial, said in a note.
Brent crude rose 4.6% and climbed above $116 per barrel. US crude oil rose 4.4% and hit $104.30 per barrel.
The S&P 500 and Nasdaq Composite have clinched six record highs this month, rebounding after tumbling in March. The Dow is just over 2% away from its record high set on February 10.
The rally has been supported by fresh enthusiasm for AI and hopes that ceasefires in the Middle East will prevail. While investors will be attuned to Powell’s remarks this afternoon, they’ll also be watching the Strait of Hormuz, and awaiting earnings results for Big Tech companies including Alphabet (GOOG) after the closing bell.
What to expect from today's Fed decision
Markets are pricing in a 100% chance that the Federal Reserve makes no move on rates at the conclusion of its third meeting this year, keeping its benchmark interest rate in a range of 3.5%-3.75% as it tackles rising inflation and a tepid job market.
Even before the war with Iran, the central bank was widely expected to hold rates steady as officials continue to gauge the impact of President Donald Trump’s trade policies, including sweeping tariffs and a clampdown on immigration.
But the ongoing standoff in the Middle East has pushed up the cost of energy, spiking prices at the pump to $4.23 as of April 29 — and more consumer goods look set to see price hikes as the impasse in the Strait of Hormuz continues to block the majority of oil movement in that region.
The Federal Open Market Committee, which is the central bank’s 12-member rate-setting body, is set to release a statement on its latest monetary policy decision at 2 p.m. ET.
A press conference with Fed Chair Jerome Powell is scheduled for 2:30 p.m. ET — likely his last such meeting with reporters, since his term at the helm of the central bank expires on May 15.
Will Jerome Powell stick around at the Fed? Here’s what insiders told us
The succession drama at one of the most powerful institutions in the world has sparked a new guessing game in Washington and on Wall Street: Will Federal Reserve Chair Jerome Powell stay, now that the Justice Department has dropped its extraordinary investigation into him?
Powell’s term as Fed chair expires on May 15, but his separate term on the Fed’s powerful board of governors doesn’t lapse until January 2028.
It’s a pivotal subplot of Wednesday’s Fed meeting and press conference, where Powell could reveal his plans, or at least drop hints.
Normally, this isn’t much of a debate: The leader of the Fed typically exits once their four-year term expires, even though technically they can hang around as a governor and continue voting on interest rate decisions.
But these aren’t normal times.
Read more here.
