Federal Reserve Holds Rates at 3.50–3.75% in Powell's Final Meeting

The Federal Reserve announced on April 29, 2026, that it would maintain its benchmark interest rate in the 3.50–3.75% range, marking the third consecutive pause this year following decisions in January and March. The decision came at the final policy meeting chaired by Jerome Powell, whose 14-year tenure at the Federal Reserve concludes May 15, 2026.

Powell's Tenure: Stability Through Turbulence

Jerome Powell navigated the Fed through the COVID-19 pandemic, the subsequent inflation surge, an unprecedented 525 basis point interest rate increase between March 2022 and July 2023, and the subsequent achievement of a soft landing — economic deceleration without recession. Markets had priced a 94% probability of no change ahead of the announcement, reflecting consensus that further tightening was complete.

Inflation, measured by the Consumer Price Index, stood at 3.3% year-over-year in March 2026, remaining above the Fed's 2% long-term target. Powell noted in his statement that the central bank continues to monitor inflation trends while balancing employment objectives.

The Transition: Kevin Warsh Successor

President Trump has nominated Kevin Warsh, a former Federal Reserve Governor, to succeed Powell as Chair. The Department of Justice concluded its investigation into Powell on April 25, 2026, clearing the path for Warsh's confirmation process. Warsh served on the Fed's Board of Governors from 2006 to 2011 and has been widely expected to adopt a more market-friendly approach to monetary policy.

Powell affirmed he will remain as a Governor through January 2028 and will serve as "chairman pro tempore" until Warsh is confirmed. This transition period is expected to be brief, with analysts anticipating confirmation within weeks.

Market Reaction and Rate Cut Expectations

Markets are pricing in one to two interest rate reductions through the end of 2026, with a potential target range of 3.00–3.25% by year-end. The S&P 500 closed at 7,138, the VIX volatility index at 18, gold at $4,626 per ounce, and the 10-year Treasury yield at 4.35%.

Investors are monitoring whether the Warsh-led Fed will accelerate cuts or maintain a gradual approach, given lingering inflation concerns and employment strength. The distinction between Powell's data-dependent framework and Warsh's expected emphasis on market stability remains a focal point for traders positioning for the remainder of 2026.

What's Next

Powell's final meeting closes a chapter in Fed history. The inflation crisis, rate hiking cycle, and soft landing achieved under his leadership have reshaped monetary policy discourse. Markets now await Warsh's confirmation and the strategic direction he will chart, particularly regarding the pace and magnitude of potential rate relief in the coming months.

The Fed's next scheduled meeting is June 17–18, 2026, at which point new leadership may be in place.