On April 29 (late evening of April 30 Beijing time), Powell, in his capacity as Fed Chair, chaired the final FOMC meeting and press conference. The interest rate was maintained in the 3.5% to 3.75% range, with 4 descents, marking the highest dissent count at a single Fed meeting since October 1992.
The two-hour meeting covered rate decisions, inflation assessment, reaffirmation of independence, personnel arrangements, and a summary of his eight-year term. This article summarizes Powell's key positions in his opening statement and Q&A with the press.
Regarding the Rate Decision
The FOMC decided to maintain the federal funds rate target range at 3.5% to 3.75%, marking the Fed's third consecutive pause in 2026. Powell stated in his opening remarks that the Committee had cut rates by a cumulative 75 basis points since the fourth quarter of last year, and the current policy stance is deemed sufficient to support both ends of the dual mandate: maximum employment and the 2% inflation target.
However, the real highlight of this meeting was not the rate itself, but the 4 descents. This is the highest number of dissents at a single FOMC meeting since October 1992. Powell confirmed in the Q&A that 3 descents were regarding the statement language rather than the rate decision itself. Three members believed that the "easing bias" verbiage should no longer be retained, advocating for a neutral stance where the possibilities of raising and lowering rates are equal. These three dissenters all agreed to keep the current rate unchanged, with the disagreement solely on the wording of the statement.
Powell acknowledged that the number of members supporting a language change had significantly increased since the March meeting, and such discussions were "entirely appropriate." However, he personally opposed adjusting the guidance at this meeting, citing the unnecessary rush to make a decision now when circumstances could significantly change in the next 30 to 60 days or even by the next meeting in June 16-17. This meeting will likely be chaired by Wash for his first time, and the decision on the retention of the "easing bias" wording will almost certainly be left to the new Chair.
Regarding the neutral rate position, Powell judged that the current rate level is close to the higher end of the neutral range. He has always believed the neutral rate to be between 3% and 4%, slightly above 3.5% currently, sitting at the upper end of a reasonable range as he sees it. This indicates that the policy is no longer distinctly restrictive, possibly slightly tight or neutral, allowing for rate hikes or cuts. The market's interpretation of the Fed's reaction function aligns closely with his statement.
Regarding Inflation Assessment
In his opening remarks, Powell mentioned that the overall PCE rose by 3.5% year-on-year in March, mainly due to a significant global oil price increase driven by the Middle East conflict; excluding the volatile food and energy categories, core PCE increased by 3.2% year-on-year. Powell believes this largely reflects the impact of tariffs on prices in the goods sector. Short-term inflation expectations have risen this year, mainly due to the sharp increase in oil prices; however, most long-term expectation indicators remain consistent with the 2% inflation target.
When describing the inflation situation, Powell used a less common word, "misbehaving." He repeatedly mentioned that although the core inflation rate is very low, it is moving in the wrong direction, which was his recurring assessment in this meeting.
The oil price was a variable that was repeatedly mentioned in this meeting. A reporter mentioned on-site that the Brent crude oil price is now close to $120 per barrel. Powell said the Fed's usual practice is to look through transient energy shocks because oil prices often reverse, and monetary policy is subject to long and variable lags, so there is no need for an immediate reaction. However, given that the inflation rate has been consistently above 2% for the past few years, and the Fed has already looked through tariff shocks, the tolerance for looking through energy shocks is lower. Powell believed that a drop in oil prices and progress on tariffs would need to be seen before considering a rate cut. The duration and closure of the strait are unpredictable variables.
Supporting this caution is a historical framework. Powell said the U.S. economy has actually experienced four supply shocks: the pandemic, the Russia-Ukraine conflict, tariffs, and the Iran crisis. Each supply shock has the ability to simultaneously drive up inflation and unemployment, making it difficult for the central bank to know what to do. This is Powell's fundamental explanation of the current policy dilemma and his core framework for understanding internal committee disagreements.
Regarding the Overall Economic Condition
Powell's overall assessment of the current U.S. economic condition can be summarized in one sentence. Given all these blows, it is very resilient. He said, "You could almost say quite resilient."
Specific support includes two aspects. First, consumer spending remains quite strong, with the latest data showing strong performance, consumer spending on retail sales, credit card data, and bank data still robust. Second, business investment continues, especially in data center construction. Powell specifically mentioned the almost insatiable demand for data centers across the U.S., with significant funds being poured into this area and reason to believe it will continue. Powell believes a better indicator of economic momentum is the Personal Consumption Expenditures Price Index (PCE), which is even higher than overall GDP growth, indicating that the economy is growing at a rate of 2% or faster.
However, behind the 4.3% unemployment rate lies a less comfortable situation. Powell acknowledged that from the perspective of job seekers, this number may not necessarily represent a benign labor market. Quit rates and job vacancy rates are low, with no net new employment actually being added. The labor market is in a "unusual and uncomfortable" balance. People without jobs find it difficult to enter the workforce unless someone else quits. Other indicators, including job vacancies, layoffs, hiring, and nominal wage growth, have seen little overall change in recent months.
Regarding the drag on the economy in other areas due to the Iran conflict, Powell's assessment is that it is not yet visible. He admitted that if gasoline prices were to rise significantly again, logically it would take money out of people's pockets that could be used for other expenses, affecting other consumption. However, this transmission has not been seen yet. He emphasized that the U.S. is different from Western Europe or Asia, being a net exporter of oil and the economy is no longer as energy-intensive as in the 1970s. Therefore, the drag on the U.S. economy from this conflict is relatively small, with the import sector accounting for only 10% of the U.S. economy.
About Federal Reserve Independence
This was the most significant topic throughout the entire press conference, and it was the focal point that Powell repeatedly emphasized in his opening statement and responses to questions from journalists.
Powell's core concern is the level of legal challenges facing the Federal Reserve. He stated that the real concern is a series of legal challenges against the Federal Reserve that threaten its ability to conduct monetary policy without regard to political considerations. He believes that the legal actions taken by this administration are unprecedented in the Federal Reserve's 113-year history. Powell specifically differentiated between "verbal criticism" by elected officials and "legal actions." He has never seen verbal criticism as an issue, but legal actions are another matter, and there continues to be a persistent threat of such actions.
Regarding the foundation of independence, Powell stated that it is "largely legal," but he also acknowledged that the Federal Reserve has had to turn to the courts to successfully defend this, and while progress has been made, it is far from over. He emphasized that behind independence, there is also a set of customs, as well as boundaries between the Federal Reserve and the government, and the Federal Reserve and the Treasury Department, which must be respected. Each administration keeps an eye on the Fed's tools, hoping to redirect them for other purposes, but this would drag the Fed into political and fiscal policy. Powell said the Fed has resisted this well.
Regarding Governor Waller's speech on the dismissal of regional bank presidents, Powell's statement was the most significant part of the entire press conference. In his recent speech, Waller opposed the government's idea of dismissing regional bank presidents based on differing views on monetary policy. Powell strongly supported Waller's position. He said that if every administration could intervene and do so, it would mark the beginning of the end of the Fed's ability to independently set monetary policy, turning the Fed into just another cabinet agency. Powell explicitly stated that he would not support such actions.
When asked if the Fed's current independence is as robust as when he took office, Powell admitted that it is currently at risk. He hopes to move beyond this era and return to a path of respecting the law and customs to allow the Fed to do what it needs to do. Powell stated that he believes the Fed will continue to make decisions based on rigorous analysis rather than political considerations, but this requires effort. He also acknowledged widespread concerns that these issues may persist, which would be a problem.
About Powell's Remaining as Governor
In the closing remarks of his opening statement, Powell announced the most important personnel news of the meeting: he will continue to serve as governor after stepping down as chair on May 15, with a "to be determined" term. He will maintain a low profile during his time as governor.
The core reason for remaining is the threat to independence mentioned above. Powell stated that he had originally planned to retire, but events of the past three months have left him no choice but to stay until these issues are resolved. Specifically, while the Department of Justice dismissed the case last Friday, Powell noted a line in the dismissal statement that said, "if needed, she will not hesitate to restart the investigation." Over the weekend, the DOJ provided a limited assurance, stating that they would not reopen the investigation unless there is a criminal referral from the Fed's Inspector General. However, Powell said that until the investigation is thorough, transparent, and ultimately concluded, he will not leave the Board of Governors. This is the reason he cannot step down at this time.
As for whether he will become a "shadow chair," Powell has repeatedly denied it. He said he would return to his role as a governor, respecting the chair's position. He described his future posture with six years of experience as a governor: he understands how difficult it is to get 19 strong-minded people to reach a consensus, so he will strive to be a constructive participant and not unnecessarily increase the chair's challenges. "Support the chair as much as possible when you can, and when you can't, you can't."
When asked if staying on is a form of political balance or if it is depriving Trump of the majority seat he could have obtained if he had resigned, Powell said he totally does not see it this way. He emphasized that he stayed on because of legal actions that had already taken place. Having served as a governor for almost six years, he understands what a departing chair's role should be, and his intention is not to disrupt. Powell admitted he hopes to see things calm down and the Fed return to a traditional mode of respecting the law and customs. He stressed that his decision will be guided entirely by "what I believe is in the best interest of the institution and the people we serve."
About the Communication Framework and Dot Plot
During last year's communication framework review, Powell personally wanted to push for some reforms. However, he admitted at a press conference that making significant changes to the dot plot or SEP could not gain wide support within the committee, so he gave up. Powell's personal attitude has never been the biggest fan of the dot plot, but without a better alternative, it was impossible to beat the existing thing. He said it is natural for each new chair to examine communication tools and think about what changes can be made.
Regarding the possibility of Wash adjusting the form of communication, Powell's attitude is openly supportive. He said it is very healthy for every new chair to examine the way they communicate, as communication itself is very complex, and you can always focus on new things. If Wash adjusts the communication tools, Powell's assessment is "completely appropriate." This was his response when asked by reporters for suggestions on Wash's communication tools: he would not advise Wash through the press, but it is healthy and appropriate for every new chair to examine communication tools.
However, regarding the practice of holding a press conference after each meeting, Powell himself still believes it should be maintained. The reason he gave is that it is very helpful for someone to represent the committee in conveying information, rather than letting the other 18 individuals speak out on their own, which would become extremely chaotic. There is a significant divergence of views within the Federal Reserve Board. He admitted he did not know if Wash must maintain this approach, but people have already become accustomed to it.
As for the Federal Reserve being the only developed central bank that does not release forecasts, Powell explained that this is because there is a 19-person committee, making it difficult to reach a predictive consensus there. However, he believes there is nothing wrong with the Fed's communication itself, and doing it differently and better is also the most natural thing in the world.
About the Warsh Transition
Powell congratulated Warsh on smoothly passing through the Senate Banking Committee this morning, calling it an important step forward and wishing him a smooth process ahead.
However, unlike the transition with Yellen, Powell said it was a completely different situation. He mentioned that he and Yellen had worked together for six years, with offices right across the hall from each other, which was a very different transition. He had not seen Warsh since a dinner they had in January. Powell expressed that he was unaware of what the normal process looked like, but he believed it would be a very normal, standard transition process, which was what he was looking forward to.
Regarding Warsh's ability to withstand political pressure from the President, Powell's response was measured. He said Warsh strongly testified to that during the hearing, and he would take Warsh at his word.
When asked if he was concerned about the Fed's reputation being under pressure and if that was one of the reasons he wanted to stay in office, Powell said that reputational issues were not the primary driver of his current thinking. Monetary policy is set by 19 people collectively, providing a lot of stability. Every incoming Chair faces the same situation: 18 FOMC colleagues, 11 with voting rights, needing to build consensus. He praised Warsh for being very capable in this regard, having the skill to get this done.
About the Eight-Year Term
When asked about his term legacy, Powell's response was, "I’ll let others judge that."
But he summarized the policymaking background of the past six years in a paragraph. He said that this was very different from what had prevailed for a long time. In the past, the Fed and other central banks engaged in demand management, and inflation remained low over a 25-year period. Now, it is a very different and more challenging world, requiring a balancing act between the two parts of the dual mandate. All central banks with an inflation mandate have to do the same.
When asked if the Fed's 2020 framework focus on the labor market would make future Chairs less willing to pursue a tight labor market, Powell did not believe that pandemic inflation should be blamed on the Fed's focus on employment. He said this was a global shock involving economic closures, reopenings, stimulus policies, and more. If you look at charts of the top ten economies, you can't tell which one is the U.S., Germany, or France. He believed this view should not be blamed for high inflation. Powell acknowledged that the labor market had overheated and tightened during the pandemic recovery, but it was no longer the source of inflation.
For those households feeling that inflation has been out of control since the pandemic, Powell said the Fed is committed to sustainably lowering inflation to 2%. This is a commitment that is ongoing and unwavering. He admitted that events causing cost pressures keep happening, and the Fed's best course of action is to use tools to guide inflation back to 2%; trying to achieve this goal too quickly could come at a significant cost in terms of unemployment, among other things, so the Fed is trying to achieve this goal over time in the least disruptive manner.
When asked about decisions during his term that he is most proud of, Powell said it's hard to pick out individual things at this time. He and his colleagues have consistently worked to make what they believed were the best decisions for the American people based on the tools and objectives Congress has given them. This has been very challenging as they've been in a supply shock situation for over six years. He is very proud of the work done with his colleagues over these years.
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