The April meeting of the Fed’s monetary policy committee featured a lot of institutional news for a month in which the Fed kept monetary policy unchanged. The outlook for the economy and monetary policy remains unclear due to geopolitical turbulence and domestic policy uncertainty. This headline risk is delaying additional Fed monetary policy easing, likely until the end of 2026 or possibly into 2027.
The Fed continued its current pause for rate reductions at the conclusion of the April meeting of the Federal Open Market Committee (FOMC), the central bank’s monetary policy decision making body. The FOMC held the short-term federal funds rate at a top rate of 3.75%, the level set in December of last year.
This marked the third policy pause since the Fed resumed easing in September of 2025. The Fed’s statement of current economic conditions and policy stance was relatively unchanged from March to April.
However, the April FOMC meeting featured the largest number of policy/communication dissents in more than 30 years. The decision to continue the current policy holding pattern, with an easing bias, was approved with an 8 to 4 vote. One of the four dissents, Governor Miran, voted to cut the federal funds rate by 25 basis points. The remaining three dissents, consisting of a set of regional governors, were on the other side of the policy equation. These bank presidents supported the current pause but objected to the easing bias in the statement given a tick-up in inflation due to factors that include higher oil prices due to the Iran war. Core inflation is registering near 3% while the Fed’s target is 2%.
The April meeting also likely marked the last FOMC decision featuring Chair Powell as Chair of the Fed’s Board of Governors after an eight-year run. President Trump’s choice for Chair, prior Federal Reserve Governor Kevin Warsh, appears set to be approved by the Senate and will likely chair the next meeting.
However, in a change with precedent, while Powell will cease to be Chair of the Board when Warsh assumes leadership, Powell is retaining his seat as a Governor on the Board and thus a member of the FOMC. His position as Governor can last as long as 2028.
Powell noted that he will remain as a Governor as long as a Justice Department probe into the cost of the Fed’s headquarters renovations remains active. That probe is viewed as political by some market analysts. With the departure of Miran, whose seat Warsh is taking, this eliminates a possible Trump pick for the Board. Powell noted that Trump’s criticism of the Fed was “unprecedented in the 113-year history” of the central bank.
U.S. Attorney Jeanine Pirro had previously indicated that the investigation of the renovation would be referred to the Fed’s inspector general, seemingly ending the probe. However, Pirro later noted that the investigation could be reopened. It appears that this pivot is responsible for Powell’s decision today.
So while Warsh will, eventually, become Chair, Powell is remaining on the Board for the time being. This could complicate the timing of Warsh’s intended policy changes. The outlook for the Fed is thus more of the same: a data-dependent holding pattern as headline risk persists, both economic and institutional. Moreover, given the hawkish stance of some of the Fed regional bank presidents, could the market see additional institutional turmoil?