Tonight will be Powell's last press conference as Fed Chair. Earlier on the same day in Eastern Time, the Senate Banking Committee will vote on his successor Kevin Wash's nomination. Wash is likely to receive the Banking Committee's approval before his predecessor walks into the press room.
The interest rate is highly unlikely to change, with the market almost certain in the 3.5% to 3.75% range, marking the third consecutive pause in 2026. April is not an SEP meeting. The FOMC only synchronizes economic projections and the dot plot four times a year, and April is not one of them. There are no numbers to see tonight.
So what to listen for is not the interest rate, but three things that are already happening but have not been connected yet.
The Screw He Tried to Loosen But Couldn’t
At the March 18 press conference, Powell left a remark that many overlooked. When asked by a reporter if the FOMC was considering modifying the format or communication of the Summary of Economic Projections, Powell responded, "We've looked closely at many aspects of the SEP and the communication framework, but no single proposal has garnered broad support from the Committee. I have some things I would like to do, but they have not garnered sufficient support."
In 2019, Powell decided to expand the Fed's press conferences from four times a year to eight. After each FOMC meeting, the Chair would face the press in the afternoon. He wanted to make the Fed's policy path more predictable with greater transparency. Since then, each press conference has become a ritual in the global capital markets. Analysts dissect his every word, hedge funds adjust positions based on his tone, and emerging market central banks decide their policy pace based on his hints. This system has been running for seven years.
But the 2021 and 2022 inflation surge turned the logic of this system upside down.
In the year leading up to the CPI spiraling out of control, Powell repeatedly stated that "inflation is transitory." Then, in June 2022, CPI soared to 9.1%, the highest in 40 years. Powell's words were completely overturned by that year's prices. The higher the transparency, the more frequent the explanations, the greater the credibility loss when proven wrong.
After that, he began to restrain himself. In subsequent press conferences, he increasingly relied on pre-set briefing materials and gave shorter impromptu responses. The wording that could make the market speculate repeatedly gradually turned into a few clichés. This was not a retreat. The plain-speaking era he initiated, the mistake was making too many statements. The more he mentioned forward guidance, the more tiresome it became, the more fragile it was.
On March 18, the "some things I would like to do" he admitted to were aimed at loosening this machine. Say less about the future, more about the present, let policy execution stabilize the market, rather than policy hints.
In theory, he still has one more chance. Tonight is his last press conference as chair, and he can try again. For example, he could downplay the forward guidance in his opening statement or suggest reducing the frequency of press conferences after each meeting in the future. This doesn't require a committee vote; he just needs to say a few words on stage. But this action comes with a cost: it will be seen as him paving the way for his successor Walsh's "no forward guidance" stance.
That's the first thing to listen for tonight. Will Powell, in his own house, take the first screw out himself.
Ceasefire, but Inflation Persists
In March, CPI rose 3.3% year-on-year, jumping nearly 1 percentage point from February's 2.4%. Gasoline surged by 21.2% in a single month, marking the largest monthly increase in almost four years. A gallon of gas rose from $2.94 to $4.12 since the Iran conflict began.
When this data was released on April 10, the US-Iran ceasefire had already taken effect. Energy prices have mostly retraced since April. If the Fed is only facing an external shock, then March's figure should be the peak.
The issue is with Bank of America's forecast that even after the ceasefire, inflation won't ease. Bank of America used a specific term, "a typical stagflation market environment." They then raised their inflation expectation for 2026 from 2.8% to 3.6%, lowered their growth expectation to 2.3%, a 50 basis point cut, with oil priced at $100 a barrel. The core CPI path in the model spikes to 3.2% in Q2 and drops to 2.8% by year-end.
The Wall Street Journal pointed out a detail after the April ISM manufacturing data came out. In the April ISM data, the prices sub-index is accelerating, but new orders and employment are both in contraction. When inflation started in 2021, all three sub-indexes were in expansion, with price increases accompanied by real demand expansion. This time, prices are rising while demand is shrinking.
This is the shape of stagflation but not stagflation itself. The unemployment rate is at 4.3%, and the past year's growth rate of 2.1% shows no signs of a downturn.
Over the past five years, the US economy has endured four rounds of supply-side shocks from pandemic restarts, Russia-Ukraine conflicts, tariff restructuring, and Iran conflicts. The intervals between shocks have been so short that inflation expectations haven't had time to readjust. The 21.2% gasoline surge in March is not just due to the Iran conflict but because the aftershocks of the previous three shocks have not yet dissipated.
Interest rates have been held at 3.5% to 3.75%, with three consecutive meeting pauses. CME FedWatch indicates at most one rate cut in 2026. Among the 103 economists surveyed by Reuters, 56 believe there will be no action before September.
The second thing to listen to tonight is this. How will Powell describe the current situation, as a one-time shock to be managed or will he acknowledge that four shocks stacked together have already altered the inflationary structure.
Brainard's Target Isn't Rates
During the Senate Banking Committee's confirmation hearing on April 21, Brainard's opening statement began with: "Inflation is a choice, and the Fed must take responsibility for it. The mission Congress has given the Fed is to ensure price stability, no excuses, no equivocation, no countermanding, no struggling."
This statement was not prepared for the hearing. As early as May 2025, Brainard's speech at the Hoover Institution was titled "Inflation is a Choice." In the same year, in July, he publicly stated on CNBC that the Fed needs a thorough policy overhaul. Both of these statements were made before his formal nomination by Trump in January 2026. Brainard's assumption of the Fed chair is not a temporary mission but the final step in his over ten years of preparation.
During the hearing, he outlined clearly what he wants to change: abolish forward guidance. Not commit to holding a press conference after every meeting. Establish "a different, new framework for inflation." Describe the core PCE measure currently used by the Fed as "a rough estimate."
The market understands this set of proposals as more hawkish. But this label is too simplistic. Brainard spent a lot of time during the hearing discussing AI. AI will boost productivity, lower inflation, and therefore support rate cuts. What he opposes is structural easing. Quantitative easing, an expansive balance sheet, backing government spending — these are all on his chopping block. However, he does not oppose low rates being driven by a productivity dividend.
What he wants to change is not the level of interest rates, but how the Fed communicates and what it can endorse.
June 16 and 17 could be Brainard's first FOMC meeting as chair, traditionally the SEP meeting, where updated economic forecasts and the dot plot are released. But Brainard publicly promised during the hearing to abolish the dot plot. The statement on June 17 will be the first public test of his consistency. If he indeed does away with the dot plot, it will be the first breakpoint in the Fed's communication framework in over a decade. All assets that use the "Fed signal" as a reference point may have to revert to a signal-less state.
Tonight is the final remarks Powell will make as Fed Chair; the next remarks will begin with Brainard. Brainard has publicly pledged that his remarks will not be as numerous as Powell's. Abolishing forward guidance, not committing to a post-meeting press conference after every meeting, and reducing the frequency of Fed communications are part of his plan.
Starting tonight, the Fed will become increasingly silent.
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