Fed meeting updates: Interest rates hold steady as Jerome Powell addresses his final FOMC meeting

Over time, Fed decisions shape mortgages, credit card interest rates, business loans, and the return rates on high-yield savings accounts. Stephen Kates, a financial analyst at Bankrate, said the Fed's likely decision to keep interest rates as is means borrowing rates aren't budging. "We're not going to see lower rates on credit cards or home equity lines of credit," he said. "Anything that's going to be tied to short-term interest rates isn't necessarily going to move. That's not a bad deal for savers." Over time, Fed decisions shape mortgages, credit card interest rates, business loans, and the return rates on high-yield savings accounts. Stephen Kates, a financial analyst at Bankrate, said the Fed's likely decision to keep interest rates as is means borrowing rates aren't budging. "We're not going to see lower rates on credit cards or home equity lines of credit," he said. "Anything that's going to be tied to short-term interest rates isn't necessarily going to move. That's not a bad deal for savers." Higher rates under Powell have also had an effect on the job market. If it costs companies more money to operate, they have fewer funds available to pay staff, contributing to hiring freezes and layoffs — which we've seen across Big Tech and other white-collar fields. AI's rapid reshaping of the economy and the job market has presented a challenge for the Fed. Powell has taken a day-by-day approach, but hypothesizes that AI will create jobs, even as it makes others obsolete. Warsh is even more bullish, telling senators at his confirmation hearing that data center investment and changes in the job market from new technology will boost the economy. AI's rapid reshaping of the economy and the job market has presented a challenge for the Fed. Powell has taken a day-by-day approach, but hypothesizes that AI will create jobs, even as it makes others obsolete. Warsh is even more bullish, telling senators at his confirmation hearing that data center investment and changes in the job market from new technology will boost the economy. "Something that I really do believe is that AI is a testament to American ingenuity," Warsh said. "The United States is the best-positioned country in the world to take advantage of it so that the US economy and US workers benefit from it." Goldman Sachs vice chairman Robert Kaplan said on a company podcast that he expects Kevin Warsh to argue that the central bank should be focused not on the next three to six months, but on the longer-term horizon in deciding the path of monetary policy. He sees AI disinflation as a likely point of focus and adds that he expects to see Warsh cite the productivity improvements of the 1990s under Alan Greenspan's Fed. Goldman Sachs vice chairman Robert Kaplan said on a company podcast that he expects Kevin Warsh to argue that the central bank should be focused not on the next three to six months, but on the longer-term horizon in deciding the path of monetary policy. He sees AI disinflation as a likely point of focus and adds that he expects to see Warsh cite the productivity improvements of the 1990s under Alan Greenspan's Fed. That said, he also thinks the Fed's policy-making committee will want to see clear evidence that inflation is moving near their target after missteps in recent years, and that this may pose challenges for Warsh."They want to be risk managers, not prognosticators, so there's going to be a debate, and he's going to have to contend with that," Kaplan said. Stephen Kates, a financial analyst at Bankrate, said there are some bright spots in the job market, so the Fed likely will pay more attention to the inflation side of the Fed's dual mandate. It's possible the Fed won't lower rates this year, Kates said, but Warsh could spark a change in direction. "This is a committee decision," he added. "It's not a one-man operation. He'd have to have the agreement of his colleagues if interest rates are going to be coming down." Stephen Kates, a financial analyst at Bankrate, said there are some bright spots in the job market, so the Fed likely will pay more attention to the inflation side of the Fed's dual mandate. It's possible the Fed won't lower rates this year, Kates said, but Warsh could spark a change in direction. "This is a committee decision," he added. "It's not a one-man operation. He'd have to have the agreement of his colleagues if interest rates are going to be coming down." Mark Zandi, chief economist at Moody's Analytics, said that there is too much uncertainty with inflation and the Iran war for the Fed to make a move. It also means Warsh is stepping into a tough job: "It's not going to be an easy job, but he's got the skills and experience necessary to succeed," Zandi said. "But he's got some big shoes to fill because Powell navigated lots of different shocks in a very graceful and humble way." Powell is known for his cautious approach to monetary policy, often voting for rate hikes and holds to avoid driving inflation upward. His top priority has often been risk management in the face of the pandemic, tariffs, and geopolitical conflicts. Warsh also said he's tough on inflation, but he may be more primed to cut rates, as Trump has frequently asked for. At last week's hearing, Warsh said he would be less sensitive to news events, holding a more long-term view on rates. Powell is known for his cautious approach to monetary policy, often voting for rate hikes and holds to avoid driving inflation upward. His top priority has often been risk management in the face of the pandemic, tariffs, and geopolitical conflicts. Warsh also said he's tough on inflation, but he may be more primed to cut rates, as Trump has frequently asked for. At last week's hearing, Warsh said he would be less sensitive to news events, holding a more long-term view on rates. This would be unlike previous Fed chairs. As economist Claudia Sahm wrote in her April 28 newsletter, "Warsh's calls for regime change, if successful, would roll back twenty years of innovations in monetary policy at the Fed: [Ben] Bernanke's development of unconventional monetary policy (balance sheet and forward guidance), [Janet] Yellen's advancement of the maximum employment mandate, and Powell's risk management under supply shocks." On Wednesday morning, senators on the Committee on Banking, Housing, and Urban Affairs gathered in Washington, DC to vote on Warsh's nomination. He was advanced along party lines — 13 in favor and 11 against — and will proceed to the full Senate confirmation vote. Warsh's confirmation wasn't always a sure thing. The DOJ probe raised alarm among lawmakers about political interference with the Fed, especially as Trump has been vocal about wanting lower rates. Sen. Thom Tillis, a North Carolina Republican, previously said he would not support any Trump nominees for the Fed position until the DOJ probe was dropped, putting Warsh's confirmation at risk. On Wednesday morning, senators on the Committee on Banking, Housing, and Urban Affairs gathered in Washington, DC to vote on Warsh's nomination. He was advanced along party lines — 13 in favor and 11 against — and will proceed to the full Senate confirmation vote. Warsh's confirmation wasn't always a sure thing. The DOJ probe raised alarm among lawmakers about political interference with the Fed, especially as Trump has been vocal about wanting lower rates. Sen. Thom Tillis, a North Carolina Republican, previously said he would not support any Trump nominees for the Fed position until the DOJ probe was dropped, putting Warsh's confirmation at risk. But the formal end of the criminal probe alleviated the key senator's concerns. On Wednesday, Tillis said, "I want to thank the Department of Justice for he assurance they gave me" he said, adding that "they have a matter that they want to settle and that's fine with me. I am confident this investigation is over." Senator Elizabeth Warren told the committee on Wednesday that the vote puts Trump "one step closer to completing his illegal attempt to seize control of the Fed and to artificially juice the economy." On April 24, US Attorney Jeanine Pirro dropped the Department of Justice Probe into Jerome Powell. The department launched the probe in January over Powell's alleged mishandling of construction funds at the central bank's Washington DC buildings. At the time, Powell posted a video online, saying that "No one — certainly not the chair of the Federal Reserve — is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure." On April 24, US Attorney Jeanine Pirro dropped the Department of Justice Probe into Jerome Powell. The department launched the probe in January over Powell's alleged mishandling of construction funds at the central bank's Washington DC buildings. At the time, Powell posted a video online, saying that "No one — certainly not the chair of the Federal Reserve — is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure." It has been the second major legal hurdle for the Fed this year, the first being Trump's mortgage fraud allegations against Governor Lisa Cook, a case that rests with the Supreme Court. The stock market is on edge ahead of the Fed meeting. With markets pricing in near-certainty that rates will remain unchanged, investors are looking to other catalysts. Oil is on a multi-day rise back toward Iran-war highs, with Brent crude topping $116 a barrel. Meanwhile, Big Tech earnings loom. Meta, Amazon, Microsoft, and Alphabet all report after the bell on Wednesday. The S&P 500 was down 0.2% shortly after the open, and the Dow was down nearly 300 points. Kevin Warsh, Trump's pick for the next Fed chair, is a former Wall Street executive and central bank governor. He has a reputation for being tough on inflation, with a hawkish attitude toward monetary policy. At his confirmation hearing with the Senate Committee on Banking, Housing, and Urban Affairs, Warsh showed optimism about AI growth and a commitment to Fed independence. The committee is set to vote on, and likely approve, Warsh's nomination later this morning. Kevin Warsh, Trump's pick for the next Fed chair, is a former Wall Street executive and central bank governor. He has a reputation for being tough on inflation, with a hawkish attitude toward monetary policy. At his confirmation hearing with the Senate Committee on Banking, Housing, and Urban Affairs, Warsh showed optimism about AI growth and a commitment to Fed independence. The committee is set to vote on, and likely approve, Warsh's nomination later this morning. "Fed independence is up to the Fed," Warsh said at the hearing. "That has three implications: First, Congress is tasked with the mission to ensure price stability. Inflation is the Fed's choice. Second, Fed independence is at its peak in the conduct of monetary policy. And third, the Fed must stay in its lane." Inflation as measured by the consumer price index rose in March to the highest rate in two years, largely driven by higher energy prices amid the ongoing Iran war. Energy prices rose 12.5% year over year, the largest increase since November 2022. Mark Zandi, chief economist at Moody's Analytics, warned that gas prices would likely stay high if vessel traffic is still disrupted in the Strait of Hormuz. "We're going to be paying more than $4 for a gallon of regular unleaded, and inflation is going to continue to be a problem," Zandi said. "Even if things start flowing here quickly, prices come in a bit, I think we're in store for somewhat higher inflation over the next three to six months." The latest jobs report from the Bureau of Labor Statistics showed stronger job creation in March after the previous report showed that weather and a healthcare strike affected employment in February. The US added 178,000 jobs in March, blowing past expectations and offsetting the 133,000 lost the month before. Healthcare and the leisure and hospitality sector had the largest gains among major industries. However, the Iran war could still have knock-on effects for the US economy down the line. Diane Swonk, KPMG's chief economist, said this doesn't reflect the full effects of "the shock to energy prices and supply chains" because of the survey's timing. The latest jobs report from the Bureau of Labor Statistics showed stronger job creation in March after the previous report showed that weather and a healthcare strike affected employment in February. The US added 178,000 jobs in March, blowing past expectations and offsetting the 133,000 lost the month before. Healthcare and the leisure and hospitality sector had the largest gains among major industries. However, the Iran war could still have knock-on effects for the US economy down the line. Diane Swonk, KPMG's chief economist, said this doesn't reflect the full effects of "the shock to energy prices and supply chains" because of the survey's timing. "It tells us that what we already knew was that we entered the year with the tailwind, part of it being the catch-up to the government shutdown, part of it being fiscal stimulus, but now we're facing the headwinds of much higher energy prices," Swonk said, adding, "I would expect to see much softer job creation going forward as uncertainty has spiked again." With both the Fed decision and a slew of Big Tech earnings, it's set to be a busy day for markets. All three major US indexes are set to open a little higher, with futures pointing to both the Dow and S&P 500 gaining just 0.1% at the open, and the Nasdaq set to tick 0.4% higher. With both the Fed decision and a slew of Big Tech earnings, it's set to be a busy day for markets. All three major US indexes are set to open a little higher, with futures pointing to both the Dow and S&P 500 gaining just 0.1% at the open, and the Nasdaq set to tick 0.4% higher. Stocks in Europe are down on the day, though falls are largely limited. The biggest drop is in the UK, where the FTSE 100 is down roughly 0.8%. In commodity markets, oil prices rose on Wednesday, seemingly spurred by President Donald Trump's latest threat to Iran. Early in the morning, Trump shared a Truth Social post including what appeared to be an AI-generated image of himself wearing sunglasses and holding a gun with the caption "No more Mr. Nice Guy." Just before 7 a.m. ET, Brent crude, the international benchmark, was 2.8% higher at $107.30 per barrel, while WTI crude was up 3.3% to $103.25.