April FOMC Expected to Hold Rates Steady...Will This Be Powell's Final Meeting?

No Dot Plot Will Be Released at This Meeting

Powell's Press Conference May Offer Clues on Rate Outlook

If Warsh Is Not Confirmed Before Powell's Term Ends,

Powell May Serve as Acting Chair

The U.S. Federal Reserve (Fed) is expected to keep its benchmark interest rate unchanged at the April Federal Open Market Committee (FOMC) meeting, which will be held on April 28-29 (local time). As the dot plot (interest rate projections) will not be released during this meeting, attention is expected to focus on the remarks of Jerome Powell, the current Fed Chair, who will be presiding over his final meeting.

Jerome Powell, Chair of the U.S. Federal Reserve, is speaking at a press conference on March 18 (local time). Photo by AP Yonhap News

According to the CME FedWatch Tool on April 26 (local time), the probability that the Fed will maintain the current interest rate at the April FOMC stands at 100%. The current rate is in the range of 3.50% to 3.75%. Even when looking ahead to the end of the year, the probability of a rate cut remains below 30%. At the beginning of the year, the market widely expected two rate cuts within the year, but sentiment shifted after the outbreak of war in February.

CNBC, a U.S. economic media outlet, pointed out that the background for the rate freeze includes the shock of inflation, the war between the United States and Iran, and the uncertain labor market. Brent crude, the international oil price benchmark, has surged more than 55% since the war began. As inflation driven by rising oil prices takes hold, consumer sentiment is cooling. The University of Michigan's U.S. consumer sentiment index for April, released on April 24, fell by 3.5 points to 49.8 from the previous month's 53.3. According to Bloomberg, this is the lowest level in about 50 years, since 1978.

Expectations for a rate cut have also been dampened by comments from Kevin Warsh, the Fed chair nominee, who recently emphasized his "political independence" from U.S. President Donald Trump. At a Senate hearing on April 21, Warsh said, "Although the president nominated me, if I am confirmed as chair, I will serve as an independent actor." President Trump had previously criticized Chair Powell, calling him "Powell the Slow," and pressured for a rate cut. On April 21, he again insisted, "We should have the lowest interest rates in the world."

The market is closely watching Chair Powell’s remarks. This FOMC meeting could be the last one presided over by Powell, whose term officially expires on May 15. Republican Senator Thom Tillis of North Carolina, a member of the U.S. Senate Banking Committee, shifted his position and agreed to allow the confirmation of Warsh after the U.S. Department of Justice halted its investigation into Powell. The Senate Banking Committee, which consists of 24 members (13 Republicans and 11 Democrats), considers Senator Tillis’s vote significant.

Notably, the April meeting is not one of the regular meetings held in March, June, September, or December, so the dot plot will not be released. Changes in the wording of Powell’s press conference and the official statement could be the only clues provided by the Fed regarding the future outlook for interest rates. Last month, Powell maintained a hawkish stance by keeping the benchmark rate unchanged for the second consecutive meeting at the FOMC. While he stated that the effects of the Middle East war on the U.S. economy and inflation are "uncertain," he made it clear at the press conference that the Fed must see a definite decline in inflation before cutting the benchmark rate.

Some observers suggest that, due to time constraints, it may be difficult for Warsh’s confirmation to pass the full Senate before Powell’s term expires. If confirmation is not completed after his term ends, Powell has stated that he would serve as acting chair. Even after stepping down as chair, Powell could continue as a board member for about one year and six months.

This content was produced with the assistance of AI translation services.