The Fed did the expected thing—held rates steady at 3.5%–3.75%—in the least boring way possible. Four officials dissented, the most since 1992, turning Jerome Powell’s likely final meeting as chair into a monetary policy group project gone sideways.
The split wasn’t just cut-or-don’t-cut drama. One official, Stephen Miran, wanted a quarter-point cut, while Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie Logan objected to language hinting that future cuts remain on the table, according to AP reporting.
- The Fed has now paused for three straight meetings after three cuts last year.
- Inflation remains above target, with the Fed citing elevated prices partly tied to higher global energy costs.
- March payrolls rose 178,000, and unemployment slipped to 4.3%.
- Markets were pricing in no rate changes for the rest of 2026 and well into 2027.
The catch: Powell said the Fed wants to see the “backside” of both energy and tariff shocks before even considering cuts, and warned the energy surge has not yet peaked. Translation: inflation is still misbehaving, even as hiring has cooled.
Big picture: The economy is making the Fed’s job awkward. Powell said growth remains “quite resilient” and should top 2% this year, helped by consumer spending and data center investment—but higher gas prices can still drain disposable income and hit GDP.
Looking ahead… Kevin Warsh’s nomination advanced in the Senate, setting up new Fed leadership by June. But Powell plans to stay on the Board of Governors until the Fed renovations investigation is “well and truly over,” potentially keeping one more inflation hawk-ish referee on the field until as late as January 2028.
