Chairman Jerome Powell put the political fight front and center by saying on Wednesday that he plans to remain at the Federal Reserve while the battle around the central bank plays out.
The Fed kept its overnight lending rate unchanged at 3.5% to 3.75%, sticking with a wait-and-see stance as pressure builds from several directions at once.
The world’s most powerful central bank has updated dot plot still showed that a rate cut could arrive in 2026, even as traders pulled back expectations for cuts this year. That left investors with a split picture: steady rates now, but no clean promise about what comes next.
Markets had plenty to process before Powell even stepped up to the microphone. Brent crude surged during the Iran war and moved above $109 a barrel at one point on Wednesday.
On top of that, the February producer price index came in hotter than expected, giving rate-cut hopes another hit. Futures markets quickly trimmed bets on easier policy in the near term.
At his press conference, Chair Powell said:-
Chair Powell says he will stay through the investigation and the succession fight
Powell then told us that he has no plan to leave while the investigation tied to the Fed’s headquarters remodeling is still underway.
Powell said, “On the question whether I will leave while the investigation is ongoing, I have no intention of leaving the board until the investigation is well and truly over with transparency and finality.”
He also spoke about what happens if Kevin Warsh is not confirmed as his successor. As Cryptopolitan reported previously, Senator Thom Tillis, a Republican from North Carolina, has said he will block Warsh’s nomination in the Senate Banking Committee until the Justice Department probe into the remodeling issue is resolved.
That position from Tillis has turned him into a major obstacle in the process. On Capitol Hill, he has broken with his party and repeatedly called the Trump-backed DOJ probe “bogus.” He has used his seat on the banking committee to slow down Warsh’s path.
On Friday, a federal judge blocked the subpoenas that had been served to the Fed, saying they were backed by “essentially zero evidence.”
After that ruling, Tillis said it “confirms just how weak and frivolous the criminal investigation of Chairman Powell is and it is nothing more than a failed attack on Fed independence.”
Tillis then urged Jeanine Pirro, the U.S. attorney for the District of Columbia, not to appeal and to drop the matter. She did not. Instead, Pirro held a fiery news conference after the ruling, and her office quickly filed an appeal. Powell also said he has not decided whether he would stay on as a governor after his term ends and after the investigation is finished. He said:-
Chair Powell balances labor weakness, inflation risks, and war-driven oil shocks
As you should know, for more than a year, Trump and his allies have pushed Powell and other Fed officials to cut rates more often. The pressure campaign has included social media attacks, angry cable news appearances, and allegations of wrongdoing.
Still, the rate path has not bent to that noise. Powell said the central bank is trying to manage two problems at once: possible weakness in the labor market and continued upside risk on inflation.
He said, “We are balancing these two goals in a situation where the risks to the labor market are to the downside, which would call for lower rates, and the risks to inflation are to the upside, which would call for higher rates or not cutting anyway.” He added:-
Chair Powell also pushed back on talk of stagflation. He said:-
Then Powell made the point even sharper: “I would reserve the term stagflation for a much more serious set of circumstances.”
On the wider economy, Powell said:-
Powell said the United States is a net exporter of energy, which means some damage to growth, jobs, and spending could be partly offset because oil producers would earn more and could increase drilling.
Source: https://www.cryptopolitan.com/chair-powell-says-he-will-stay-on-at-the-fed/
