The FOMC held the fed funds rate at 3.5-3.75%. The decision itself was never in doubt. What was remarkable was the four dissents, the most since October 1992.
The other surprise was Powell announcing he will remain as a governor after his term as chair ends on May 15th. A decision he attributed to the unprecedented legal attacks on the Fed, calling institutional independence ‘at risk.’ He had planned to retire, but recent events changed his mind.
The notables.
- Dissent amongst the ranks: Miran wanted a cut; Hammack, Kashkari, and Logan wanted the easing bias out of the statement.
- Powell acknowledged the centre of the committee is “moving toward a more neutral place,” and that removing the bias “conceivably could come as soon as the next meeting.”
- The press conference had a slightly hawkish tilt with Powell saying they “want to see the backside of energy and tariffs before even thinking of reducing rates.”
The implications.
- Inflation is running hot on two fronts, tariffs and oil, and the Fed appears to have no appetite to move until at least one of those resolves.
- With a new chair comes a new communications framework, and potentially a new tone on the dot plot. The transition adds uncertainty on top of an already uncertain macro backdrop.
- For now, the bond market is pricing no cuts in 2026 (which we think is reasonable).
