Fed Keeps Rates Steady In Powell’s Last Rate Decision; All Eyes Now On Warsh

• Powell to stay on as governor after ending his term as Fed chair.
• Powell sees the economic outlook to be ‘highly uncertain’ over elevated oil prices due to the ongoing U.S.-Iran war. 
• S&P500 and US Treasuries remain muted after the decision. 

The Federal Reserve held its benchmark interest rates steady on Wednesday at its April 2026 policy meeting, supported by a resilient labor market, as attention shifted to Kevin Warsh, who is poised to succeed Jerome Powell as Fed chair. 

The Fed announced that it will hold key interest rates at 3.50% - 3.75%, in line with market expectations. Markets are now pricing in an 85% chance the central bank doesn't move rates at all for the rest of 2026, per the CME FedWatch Tool. 

Earlier this morning, the Senate Banking Committee voted to advance Kevin Warsh’s nomination as Fed chair to a full Senate floor vote, bringing him one step closer to becoming the 17th chair of the central bank. 

Powell's tenure as Fed chief ends on May 15, but his separate term as a member of the central bank's Washington-based Board of Governors extends to January 2028. Powell, in the interest rate press conference, said he will “stay on” as governor. 

"After my term as chair ends on May 15th, I will continue to serve as a governor for a period of time to be determined," Powell said.  

High oil prices due to the ongoing U.S.-Iran war have stoked inflation and concerns about GDP growth. The Fed's preferred inflation measure, the Personal Consumption Expenditures (PCE) Price Index, has remained above the central bank's 2% target. While the headline PCE for March 2026 came in at 2.8%, the core PCE was 3.1%. 

Jerome Powell, in his press briefing, said he sees the economic outlook as “highly uncertain” and the effect of the US-Iran conflict on the economy as “unclear.” 

"Remember when gas prices go up, that's disposable income coming out of people's pockets so they're going to spend less on other things. So there will be a hit to GDP," Powell said. "So it's a question whether spending goes down to offset the inflationary effects." 

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.32%, while the Invesco QQQ Trust (QQQ) gained 0.14%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory. 

The iShares 7-10 Year Treasury Bond ETF (IEF) was down 0.4% at the time of writing.

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