The Federal Reserve will announce its latest interest rate decision Wednesday, with Chair Jerome Powell presiding over what is expected to be his final post-FOMC news conference as chairman. His term expires May 15, though he may remain on the Board of Governors through January 2028.
The Federal Open Market Committee is widely expected to leave the benchmark federal funds rate unchanged at the current target range of 3.5% to 3.75%. Inflation remains elevated above the Fed’s 2% target, a situation complicated by geopolitical tensions following the Iran conflict.
The path to confirming Powell’s successor has cleared significantly. Former Fed Governor Kevin Warsh, President Donald Trump’s nominee to lead the central bank, appears headed for confirmation before the June FOMC meeting after the Justice Department dropped its investigation into Powell’s testimony regarding the Fed’s costly renovation project.
Sen. Thom Tillis, R-N.C., who had blocked Warsh’s nomination over concerns about the DOJ probe, reversed course after U.S. Attorney Jeanine Pirro announced the investigation’s closure. The Fed’s inspector general will assume oversight of any remaining inquiries.
“The DOJ’s probe was a serious threat to the Fed’s independence, and it needed to end before I could support Kevin Warsh’s confirmation,” Tillis said, calling the inspector general review a necessary step he expects will be conducted thoroughly.
Whether Powell will continue serving as a Board Governor after his chairmanship ends remains uncertain. At his March press conference, Powell stated he had no intention of leaving until the investigation concluded with transparency and finality. He left open the question of longer-term service, saying he would decide based on what serves the institution and the public best.
Economists expect Powell to remain on the Board despite the DOJ’s action. EY-Parthenon’s Gregory Daco noted that institutional continuity, not politics, likely explains the anticipated stay. Daco suggested Warsh’s views on AI-driven productivity gains and disinflation could create tension with existing Fed frameworks, making Powell’s continued presence valuable for stability during the transition.
“Dropping the investigation reduces pressure but does not eliminate it,” Daco noted. “The Inspector General review keeps governance questions active, and Powell remaining on the Board would not preclude the possibility of the DOJ reopening its investigation if new information emerges.”
The combination of a cleared confirmation path, a likely June leadership transition, and Powell’s probable continued presence suggests continuity in the Fed’s policy framework despite the changing of the guard at the top.