There were two major developments at today’s FOMC meeting, each significant in its own right, and potentially related in ways that bear on the near-term policy trajectory. The first was Chairman Powell’s indication that he intends to remain on the Board as a governor after his chairmanship expires in mid-May. When asked near the end of the press conference whether this decision was motivated by a desire to serve as “a check and balance” on threats to Fed independence, Powell replied without equivocation:“Yes, that is really what’s driving this.”
That response is without modern precedent in the post-Volcker era and signals that Powell views the preservation of institutional credibility as a priority that outlasts his tenure in the chair.
The second development was the emergence of three new dissents — from Presidents Hammack, Kashkari, and Logan — all of whom supported the decision to hold the funds rate at 3.5–3.75% but dissented against retaining the easing bias in the post-meeting statement. The language in question — “In considering the extent and timing of additional adjustments to the target…” — has appeared in every statement since the last cut and, while not explicitly referencing reductions, carries an implicit directional signal toward further easing. The three dissenters argue that signal is no longer warranted. Their position implies a growing cohort within the committee for whom the next move is as likely to be a hike as a cut.
These two developments are connected. Powell indicated personal reluctance to alter the forward guidance at this meeting despite seeing the internal case for doing so, saying:“I didn’t think we needed to do it this meeting. It really was just a question of why do we need to do that now.”He also signaled that “even by the next meeting” economic developments could materially change the calculus on that language. That next meeting will be Warsh’s first as chair. Powell’s decision to leave the guidance intact may reflect an institutional courtesy — preserving Warsh’s agency to set the tone of his inaugural policy setting — rather than a substantive disagreement with those calling for its removal.
On the economy, Powell’s tone was more constructive on labor markets while registering growing impatience with inflation. His characterization was direct:“The labor market shows more and more signs of stability, whereas inflation is kind of misbehaving.”On the prospect of hikes, a subject previously treated with some diplomatic distance, Powell was unambiguous: “If we need to hike, we will certainly signal that and we will certainly do it.” He also acknowledged that a shift to a neutral guidance bias — as the dissenters preferred — would itself represent a step on the road toward tightening.
The post-meeting statement contained no material changes relative to the prior meeting. In what appears to have been his final meeting, Governor Miran dissented again in favor of a cut — the lone voice in that direction as the committee’s center of gravity continues its migration toward the hawkish side.
WTS continues to look for the Fed on hold through the remainder of 2026, with the next move a firming in 2027. Today’s developments reinforce rather than alter that view. Powell’s decision to remain on the Board as a governor introduces an unusual dynamic — a former chair with an explicit mandate to preserve institutional independence, sitting at the table as an active participant in deliberations chaired by his successor. That arrangement has no clean historical analogue, and its policy implications will depend substantially on how Warsh chooses to engage with it. What is clear is that the committee is no longer coalescing around a single path. It is dividing — and the direction it divides toward will be set, for the first time in eight years, by someone other than Jerome Powell.