Jerome Powell told reporters on April 29 that he would not see them again, at least not from the chair's seat. The Federal Reserve held its benchmark interest rate at 3.5% to 3.75% in a decision that drew the most internal dissent in more than three decades, and Powell confirmed the meeting was his last as the central bank's leader before his term expires May 15.
But Powell is not walking away. He announced he will stay on the Fed's Board of Governors "for a period of time to be determined," citing what he called unprecedented legal and political pressure on the institution he has led since 2018.
The decision to hold rates came as the economy faces inflationary shocks tied to the Iran war, elevated energy prices, and soft job growth. Four of the twelve voting members of the Federal Open Market Committee dissented, the first time that many members broke ranks since 1992, USA Today reported. The split exposed a committee pulled in opposite directions, with one governor wanting to cut rates and three others objecting to language that hinted at future easing.
Fed Governor Stephen Miran preferred to lower the target range by a quarter point, consistent with his position at previous meetings. On the other side, committee members Beth Hammack, Neel Kashkari, and Lorie Logan supported the rate hold itself but opposed language in the statement they believed implied a lean toward future cuts.
The Fed's official statement pointed to uncertainty "due to developments in the Middle East," along with elevated inflation and low job gains. Minutes from the committee's March meeting had already flagged that "upward adjustments" to the benchmark rate "could be appropriate" if inflation persisted, a hawkish signal that rattled markets weeks ago.
Wall Street reacted coolly. The Dow Jones Industrial Average dropped more than 250 points, closing down about 0.6%. The S&P 500 slipped less than three points. The 10-year Treasury yield climbed more than six basis points to roughly 4.415%. Brent crude rose $2 on the day to trade above $118 a barrel.
For consumers already squeezed by gas prices, the Fed's inaction offers no near-term relief. Powell acknowledged the pain directly.
"We are very well aware that people are experiencing higher gas prices and that hurts and other things are going to start to reflect that, airline fares and other products and services. People are going to start to feel that."
Credit card rates averaged 19.57% as of April 22, down from a record 20.79% in August 2024 but still punishing for working families carrying balances. New car loans averaged 7.02%, used car loans 7.44%, and 10-year home equity loans 8.06%, all slightly lower than a year ago, but not by much.
CME FedWatch data painted a bleak picture for anyone hoping for rate cuts. As of April 28, traders saw an 87% chance that rates would remain unchanged through the December meeting. The likelihood of rates sitting at the same level does not drop below 50% until October 2027. The prospect of a rate hike, meanwhile, had vanished, FedWatch showed zero chance of an increase through December, a reversal from late March, when traders had priced in a nearly 25% chance rates would be higher by year-end.
The outgoing chair used his final news conference to issue a pointed warning about what he described as a sustained assault on the Fed's autonomy. Powell framed his decision to remain on the board not as a political act but as a defensive one, rooted in institutional obligation.
"My concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without considering political factors. These legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of additional such actions."
He went further, arguing that the attacks were eroding public trust in the central bank's ability to operate free of political influence, a quality he said "separates successful countries from unsuccessful countries."
The legal backdrop is tangled. On April 24, U.S. Attorney for the District of Columbia Jeanine Pirro announced that the Justice Department had dropped its criminal probe into Powell and the Fed over the budget for a renovation project at the central bank's Washington headquarters. But Pirro made clear the matter was not fully closed, stating that the Inspector General for the Federal Reserve would investigate the project's cost overruns and that she would "not hesitate to restart a criminal investigation should the facts warrant doing so."
A separate case involving Fed Governor Lisa Cook remains active. The Trump administration attempted to fire Cook last year over allegations of mortgage fraud, which she has denied. The Supreme Court heard oral arguments in January but had not yet issued a ruling.
Powell said he welcomed the end of the criminal probe but made clear the broader threat shaped his decision to stay. The New York Post reported that Powell had previously planned to retire but reversed course, telling reporters: "I've said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that."
He rejected the suggestion that occupying a governor's seat amounted to a political maneuver, pledging to "keep a low profile" and insisting the administration's actions left him no choice.
Hours before the rate decision, the Senate Banking Committee advanced the nomination of Kevin Warsh, President Trump's pick to succeed Powell, on a 13-to-11 party-line vote, the Washington Times reported. The vote sends Warsh's confirmation to the full Senate floor.
Powell congratulated his likely successor. "This is an important step forward, and I wish him well as the process continues," he said. He added plainly: "The Federal Reserve has only one chair. When Kevin Warsh is confirmed and sworn in, he will be that chair."
Warsh's path to confirmation has been closely watched. Sen. Thom Tillis recently dropped his opposition, clearing a significant hurdle for the nominee. The confirmation hearings themselves drew sharp questioning from Democrats, including Sen. Elizabeth Warren, who pressed Warsh on ethics and independence.
Nicholas Colas, co-founder of DataTrek Research, offered a cautionary note about the transition in an April 29 research note. Colas argued that Powell "made a serious policy mistake just months after assuming office in February 2018 by trying to convince markets that the neutral rate of interest was 'well above' 3%, a perspective he repeated regularly for months", a posture Colas said contributed to market turmoil "in anticipation of a recession caused by his overly hawkish viewpoint."
Colas warned that Warsh could face a different but equally dangerous communication trap. "Unlike Powell, Warsh is famously not a fan of regular Fed communication, so anything he does say will carry extra weight with respect to the market's price action," Colas wrote. "Warsh's rookie mistake may come from saying too little rather than too much."
For savers, the rate freeze is a modest bright spot. Many high-yield savings accounts still paid 4% annual percentage yield or higher in April, and banks had not rushed to slash CD rates. Matt Schulz, LendingTree's chief consumer finance analyst, noted that yields "are down from their peaks of a few years ago, but they're still strong compared to what we've seen for most of the past decade."
For borrowers, though, the picture is harder. With the Fed signaling no appetite for cuts anytime soon, and the committee itself divided over whether the next move should be up or down, mortgage rates, auto loans, and credit card costs are likely to stay elevated well into 2027.
Powell used his closing remarks to defend the institution he is leaving, calling the Fed "resilient, capable and staffed by professionals of extraordinary talent and exceptional dedication." He called his service a "privilege."
He also reiterated a core commitment that will now fall to his successor to honor.
"The best thing we can do is to use our tools to guide inflation back down to 2%. I think trying to get there really quickly could be very costly in terms of job loss and things like that, but we try to get there over time in a way that does the least damage possible and our commitment to that is never-ending and unshakable."
Whether Kevin Warsh shares that patience, and whether he can maintain it under political pressure that has already tested the boundaries of Fed independence, is the question that now hangs over every rate decision to come.
The FOMC meets five more times in 2026: June 16, 17, July 28, 29, September 15, 16, October 27, 28, and December 8, 9. Each of those meetings will be chaired by someone new, navigating an economy battered by war-driven energy costs, sticky inflation, and a labor market Powell described as "quite resilient" but with risks he acknowledged were real.
Powell told reporters that elected officials "are always running for reelection, and they'll always want low rates, and that will lead to inflation over time." He added: "This isn't bipartisan. This is nonpartisan. We just work directly for the American people."
That principle has been tested repeatedly in recent months. Whether it survives the transition intact matters more than any single rate decision.
The Fed's independence is not a gift from Washington. It is a guardrail built for the people who pay the bills when politicians get their way on interest rates. The next chair would do well to remember who those people are.
