The Senate Banking Committee on the same day approved Kevin Warsh's nomination along party lines, 13 to 11, bringing him one step closer to succeeding Powell as Federal Reserve Chair next month. Fed Chair Jerome Powell stated on Wednesday that, after his chairmanship ends next month, he will remain a Fed governor to counter legal attacks launched by the Trump administration against the central bank. Powell’s chairmanship will conclude on May 15, but his governorship will extend through early 2028. For decades, Fed chairs have typically stepped down after their successors take office. Trump has nominated former Fed governor Kevin Warsh to succeed Powell. Powell expressed concern that a series of legal actions are undermining the Fed’s ability to independently set monetary policy, and said he would remain low-key, with no intention of interfering with Warsh leading the Federal Open Market Committee. Subsequently, Trump mocked Powell’s decision on social media.
Powerful as Powell’s decision was, it overshadowed the division within the Fed’s interest rate meeting itself. The Fed kept the federal funds rate in the range of 3.5% to 3.75% and maintained language suggesting that further rate cuts were more likely than hikes. However, four out of twelve committee members dissented—marking the highest number of dissenters since 1992. Cleveland Fed President Loretta Mester, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Michael Strain supported maintaining current rates but opposed retaining the dovish bias toward cuts. Fed Governor Christopher Waller advocated for an immediate rate cut. The risk of energy price volatility due to the war in Iran complicated inflation outlooks, potentially forcing the Fed to prolong its pause on rate cuts or even prompting some officials to reconsider scenarios involving rate hikes.
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Original article: toutiao.com/article/1863867138341961/
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