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The Federal Reserve is widely expected to hold interest rates steady on Wednesday, in what is likely Chair Jerome Powell’s final meeting as head of the central bank. Powell’s term expires next month, and President Donald Trump’s nominee to succeed him, Kevin Warsh, has advanced to a Senate vote.
Traders have priced in 100% odds that the Federal Reserve will keep its target range for interest rates between 3.5% and 3.75%, according to CME’s FedWatch tool, matching consensus analyst projections, according to FactSet.
Other betting markets also indicate no shift. Polymarket placed 100% odds on no change, while Kalshi projected 99% odds that rates will remain within their current range.
The Federal Open Market Committee signaled last month that interest rate cuts would “likely become appropriate” if inflation falls below the Fed’s 2% target. Inflation has recently accelerated, with consumer prices rising 3.3% in March as energy prices posted their largest single-month gain since 2005.
Powell is scheduled to give his last speech as Fed chair at 2:30 p.m. EST. He is expected to indicate that policy should be maintained.
Powell’s term as Fed chair ends May 15. After that, Warsh is expected to take over. Powell could remain on the Federal Open Market Committee as a governor until his term expires in 2028, though it is rare for a chair to continue serving on the committee after their tenure ends. Powell said last month he would “make that decision based on what I think is best for the institution and for the people we serve.”
The Senate Banking Committee voted along party lines to advance Kevin Warsh’s nomination to lead the Federal Reserve.
Sen. Thom Tillis, R-N.C., had previously said he would block the nomination unless the Justice Department ended a probe into Powell and the Federal Reserve over alleged financial missteps during renovations to the central bank’s headquarters. That hurdle was cleared last week after prosecutors announced an end to the investigation.
The Fed’s “dot plot” indicated the central bank expected one interest rate cut this year and another reduction in 2027. During the prior meeting, seven of 19 participants said they anticipated rates would stay unchanged this year.
Powell said it was “too soon” to determine the scope of the Iran war’s effects on the economy. He added that unless inflation moves toward the Fed’s 2% target, “then you won’t see a rate cut.”
Deutsche Bank analysts wrote earlier this month that rate cuts would require a weakening in labor market conditions and softer inflation. Economists at JPMorgan and HSBC have ruled out any interest rate cuts for 2026. Other forecasts cited in the article—at Goldman Sachs, Morgan Stanley, and Bank of America—favor two cuts, with the first expected in September.
In December, Trump told the Wall Street Journal that he believed Warsh “thinks you have to lower interest rates.” However, Warsh told the Senate Banking Committee last week that he was never asked to commit to rate cuts and that Trump “didn’t demand it.” Warsh also said he did not believe the Fed’s independence was threatened by elected officials, including Trump, stating their views on interest rates.
Analysts expect Warsh to maintain the Fed’s cautious approach. Aditya Bhave, Bank of America Securities’ head of U.S. economics, wrote that Warsh’s outlook “is much more consistent with an extended hold than additional cuts.” Even if Warsh favored cuts, he would be one of 12 voters on the Federal Open Market Committee.
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