The Federal Reserve held its benchmark rate at 3.5 percent to 3.75 percent on Wednesday, but the vote was anything but routine: four officials dissented, the largest split on the rate-setting committee since October 1992. Markets had fully expected no change, and this was the Fed’s third straight hold after three cuts last year.
The fight was over the Fed’s message as much as the rate. Governor Stephen Miran wanted a quarter-point cut, while Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan agreed with holding rates but objected to language that kept an easing bias in the statement. The disputed sentence said the committee would assess incoming data while considering the “extent and timing of additional adjustments,” wording that suggests the next move would likely be lower because the Fed’s most recent moves were cuts.
Powell’s last press conference as chair then turned into a second institutional story. He said he will stay on as governor after his chair term ends May 15, citing legal threats against him and the central bank. “I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors,” Powell said. He can remain on the Board of Governors until January 2028.
The decision changes the board math during the handoff to Kevin Warsh, President Trump’s nominee to succeed Powell. The Senate Banking Committee advanced Warsh in a 13-11 party-line vote hours before the Fed decision, but Powell’s choice to keep his seat prevents Trump from immediately naming another governor. Powell said he had planned to retire and would keep “a low profile” rather than act as a shadow chair.
The economic reason for caution remains inflation. The Fed statement said inflation is elevated, partly because of higher global energy prices, while March payrolls rose by a better-than-expected 178,000 and unemployment slipped to 4.3 percent. The full Senate confirmation vote on Warsh is now the concrete policy handoff to watch, with Powell still inside the building and the committee openly divided over how much easing to promise.
