Powell will hold a press conference tomorrow morning. With it effectively certain that interest rates will not change, what should the market watch for in this Federal Reserve decision?

The U.S. Federal Reserve (Fed) will hold a two-day interest-rate decision meeting. Chair Jerome Powell will give a press conference in Taiwan early Thursday (4/30) at 2:30 a.m. Against the backdrop of geopolitical tensions in Iran causing volatility in energy prices, the twin pressures of accelerating inflation and slowing economic growth have become notably more pronounced. The Fed is expected to keep the current benchmark interest rate level in order to gain more time to evaluate the various macroeconomic data. Beyond the direction of monetary policy, what markets may care about even more is whether Powell stays or leaves, along with subsequent personnel changes and their impact.

The Fed fine-tunes rate expectations and its policy statement

The Fed will kick off its two-day interest-rate decision meeting, and after a statement is released following the Wednesday 2:00 p.m. (Taiwan Thursday 2:00 a.m.) press conference in Washington, the Chair’s press conference by Powell will take place at 2:30 a.m. Markets broadly expect that the Federal Open Market Committee (FOMC) will keep the federal funds rate in the 3.5% to 3.75% range for the third consecutive time. Faced with the energy surge and potential inflation pressure triggered by the Iran conflict, policymakers currently lean toward a wait-and-see stance. Bloomberg estimates that in the policy statement, the Fed will likely make minor adjustments to its description of the labor market, reflecting that the job market remains steady even as hiring slows. At the same time, to address inflation risks, the official may adjust the wording of forward guidance, preserving policy flexibility to resume rate hikes in the future rather than only having the option to cut rates; this would directly affect market assessments of changes in overall funding costs.

Powell’s whereabouts and the variable of whether governors will remain

Because markets have already heavily priced in that rates will be kept unchanged, the focus instead is on whether the current Fed Chair Jerome Powell will stay or leave. His term as chair ends on May 15, and this meeting is expected to be the last post-meeting press conference he will主持. Investors are paying close attention to his remarks about his personal career plans—especially whether he will continue to carry out his role as a Fed governor, which doesn’t expire until January 2028. Powell previously emphasized that he will only consider stepping down once a judicial investigation into the headquarters renovation budget has been thoroughly and transparently concluded. Although the U.S. Department of Justice has recently announced the case is closed, it also stated that it will retain the power to reopen an investigation if there is factual basis. Whether Powell remains a governor will directly affect the stability of the core of Fed decision-making.

Policy challenges facing the new nominee Warsh

As the Senate Banking Committee is expected to advance Kevin Warsh’s nomination, his chances of taking over at the Fed would increase significantly. However, Warsh will face multiple serious challenges going forward. First, the political pressure to cut rates sharply will test his ability to maintain central bank monetary policy independence. Second, although Warsh has promised to bring institutional changes to the Fed, the pace of his reforms will be constrained by how quickly personnel on the committee change. If Powell chooses to remain a governor, combined with differences in policy stances among the current governors, Warsh will inevitably need to engage in complex negotiations and coordination when pushing for a new framework or integrating internal consensus.

In addition, this could also be Stephen Miran (Stephen Miran), the Fed governor, making his final participation in a policy meeting, because Warsh has already been nominated to take his seat. The market expects Miran may cast a dissenting vote against the majority’s decision in each meeting, just as he has since joining the Fed in September last year.

This article “Powell holds a press conference tomorrow morning, rate unchanged is set in stone—what should this Fed decision focus on?” first appeared on Lian News ABMedia.