Change is coming to the Federal Reserve even as interest rates are expected to hold steady.
The central bank is likely to leave its benchmark rate unchanged Wednesday at what could be Jerome Powell’s last policy meeting as Fed chair. His replacement may soon be in place after Powell’s more than eight-year tenure.
A key Senate committee is set to vote Wednesday on President Trump’s nominee to replace Powell, Kevin Warsh, which would pave the way for a full Senate confirmation in time for Warsh to assume the chair when Powell’s term expires next month. That timing was uncertain until federal prosecutors agreed to drop a Justice Department probe that had prompted Sen. Thom Tillis, R‑N.C., to threaten blocking the vote. With the probe resolved, Tillis said he was prepared to move forward and praised Warsh.
Warsh has argued there’s room to cut interest rates without reigniting inflation, in part citing productivity gains from artificial intelligence. At his confirmation hearing he stressed he would act independently and not take marching orders from the president: “The president never asked me to commit to interest rate cuts at any particular meeting … He didn’t ask for it. He didn’t demand it. He didn’t require it. And nor would I have ever done so.”
Even so, the Fed chair leads but does not decide alone. Interest-rate decisions are made by a 12-member policy committee and the chair has one vote; several members have signaled caution about cuts while inflation remains elevated and geopolitical tensions have pushed energy prices higher.
Powell could also choose to remain on the Fed’s governing board through 2028, an unusual move that would let him keep a vote and potentially limit vacancies the White House could fill. He has defended the Fed’s independence and said his choice will be guided by what he believes is best for the institution and the public. He is expected to be asked about his plans when he meets reporters after Wednesday’s meeting.