The Federal Reserve left interest rates unchanged on Wednesday as Jerome Powell presided over his last meeting as chairman.
The Fed held the rates steady at 3.5-3.75%, set after the last cut in December of 2025, in a split (8-4) vote — the highest dissent level since 1992. Amid the ongoing tensions in Iran, the Federal Reserve has been engaged in a difficult balancing act, facing threats from inflation — with oil prices up 70% on the year — and a weakening labor market, but the split vote suggests that at least a few members favor lowering rates.
The Wednesday Federal Reserve meeting was Powell’s last as Fed chair, as his term is set to conclude on May 15. Despite the fact that he was appointed by President Donald Trump in 2018, the two have had a rocky relationship. Trump often complained that Powell was not moving quickly enough to lower interest rates, nicknaming him “Too Late Powell.” Critics of Powell also argue that he was too late in raising interest rates during the Biden administration.
“In retrospect, if you look at the data we now have, the Fed should have moved in the fall and maybe even the summer,” said Scott Lincicome, director of general economics and trade at the Cato Institute.
Trump appointee Kevin Warsh is expected to move more quickly on interest rates, having criticized the Fed for reacting too slowly to inflation. At the same time, Warsh is likely to push for a reduction in the Federal Reserve’s balance sheet, which expanded rapidly when the Federal Reserve resumed quantitative easing (QE) in 2020 during the COVID pandemic. Quantitative easing injects liquidity into the market through the purchase of bonds — and Warsh argued that the adoption of similar contingency policies had continued long after the crisis had ended, contributing to rising inflation.
Warsh’s appointment was initially held up due to a criminal investigation into the Federal Reserve’s $2.5 billion renovations under Powell. Although Senator Thom Tillis (R-NC) said he had full confidence in Warsh as a qualified nominee, he blocked the confirmation from proceeding because he disagreed with the DOJ’s decision to investigate Powell.
“Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable,” he said. Tillis chalked up the criminal allegations against Powell to a “young U.S. Attorney with a dream trying to get the president’s attention.”
Others, like Sen. Tim Scott (R-SC), echoed the sentiment, saying he thought Powell made a “gross error in judgment,” but did not believe Powell committed a crime.
The DOJ ultimately dropped the investigation against Powell, clearing the way for Warsh and ensuring that Wednesday’s meeting would be Powell’s last as Fed chair.
