By Nicole Goodkind

Jerome Powell held his last press conference as Federal Reserve chair on Wednesday afternoon, but said he would stay on as a Fed governor pending the conclusion of an investigation into the renovation of the Fed's Washington, D.C., headquarters.

Powell, whose term as a governor runs through early 2028, said he would keep a low profile and has no interest in acting as a shadow chair under his presumptive successor, Kevin Warsh. That may be welcome news to Warsh, given the other challenges he is likely to face, including the most fractious Federal Open Market Committee in more than 30 years.

The Fed held its federal-funds rate target steady after its April 28-29 policy meeting in a range of 3.5% to 3.75%, as expected. What was unexpected was that four Fed officials dissented from the monetary policy action, the most dissents since 1992.

Gov. Stephen Miran voted for a rate cut. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan supported the rate stance but objected to language suggesting a rate cut could be the Fed's next move.

The FOMC's postmeeting statement referred to considerations of the extent and timing of "additional" adjustments to the fed-funds target range, implying a continuation of the Fed's rate-cutting path. All three regional presidents have spoken publicly of their concerns about greater inflation.

Powell said at a postmeeting press conference that the committee's debate over the statement's language was lively, and that the camp favoring more neutral language has grown since the last meeting. "It's a much closer thing on the committee than it was in March," he said.

Markets took note. The probability of a rate cut this year fell to 3% on Wednesday from 18% the day before, according to Morningstar data.

The core personal consumption expenditures price index, the Fed's preferred inflation measure, rose 3% in February, driven largely by tariffs on goods. Headline inflation, which includes food and energy prices, came in at 2.8%. March numbers are expected to be significantly higher. Inflation has been above the Fed's 2% annual target for five years, and the path back is getting harder to map.

The Fed's instinct is to look through oil shocks such as that caused by the Iran war, Powell said, since energy prices tend to spike and then quickly reverse. That logic still applies, he added, but with one important caveat: tariff-driven inflation is already running high, and an energy shock risks pushing prices in other categories higher. Airfares are already moving up, and the FOMC wants to see energy prices come back down and tariff inflation begin to fade before considering a rate move in either direction, he said.

Morningstar chief U.S. economist Preston Caldwell wrote on Wednesday that he doesn't expect rate cuts until 2027. If the war runs longer than expected and inflation becomes self-reinforcing, he said, the Fed may have to abandon cuts entirely and think about raising rates.

Warsh, who wants to lower interest rates, will take the helm of the central bank amid this debate.

Warsh, President Donald Trump's pick for Fed chair, is on track to be confirmed by the full Senate later in May and likely will chair his first meeting in June. He said last week during his Senate hearing that he wants less consensus-seeking and more honest disagreement at the Fed. Three officials have already shown him what that looks like.

Asked whether the easing language would survive in June, Powell said he had no idea. "I won't be standing here to answer your question," he said.

Powell framed his decision to stay on as a Fed governor as a response to what he called an unprecedented legal assault on the institution. The Justice Department opened a criminal investigation into him in January over testimony he gave about cost overruns involving headquarters renovation. U.S. Attorney Jeanine Pirro said on April 24 that the probe was closed, although she said she wouldn't hesitate to reopen it.

Last weekend, Powell said, the Justice Department told him it wouldn't reopen the case without a criminal referral from the Fed's own inspector general. A Supreme Court case over whether Trump can remove Fed governor Lisa Cook is pending.

"I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, the ability to conduct monetary policy without any consideration of political factors," Powell said.

Warsh, meanwhile, will likely chair the June 16-17 meeting with inflation running hot, three officials already resistant to easier policy, and his predecessor sitting at the table.

Write to Nicole Goodkind at nicole.goodkind@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 29, 2026 18:50 ET (22:50 GMT)

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