Fed Chair J Powell's last stand for Fed's independence results in his staying on as a governor after his tenure. He strongly believes in preserving the independence of the Fed.
This was chair Jerome Powell’s last meeting as the chairperson, and the Federal Open Market Committee decided to keep the rates neutral in the 3.5%-3.75% range with 4 dissents, 3, Hammack, Kashkari, Logan voted against easing while Miran dissented in favor of a rate cut. .
Higher oil prices from Middle East developments added a high level of uncertainty, which was counter balanced by a weak labor market.
Chair Powell has decided to stay on as Federal Reserve governor after his term expires in May, after being replaced by incoming Fed chair, Kevin Warsh, whose nomination was confirmed by the senate. In his remarks after the FOMC meeting, when asked about his decision, Powell had this to say
I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.
It’ll be when the investigation into the Fed renovation project is “well and truly over, with finality and transparency. I am waiting for that. I will leave when I think it’s appropriate to do so.
He also reiterated that he had faith in Warsh’s independence from political pressure and would not try to be a shadow chair as governor.
In response to the press and in spite of 4 dissenting votes for holding rates steady, Chair Powell said "Nobody is calling for a rate hike “right now.”
From Bloomberg Economics’ Anna Wong and Stuart Paul:
Today’s rate hold was widely expected, but what stole the show were the dissents. It’s ironic that Powell — widely considered a consensus builder — presided over the highest number of dissents of his tenure at likely his last meeting as Fed chair.
The policy statement also strengthened the description of inflation to ‘elevated,’ from ‘somewhat elevated.’ Together with the divisions evident on the committee, that underscores the challenge for Kevin Warsh — President Donald Trump’s nominee to replace Powell — to deliver the rate cuts Trump wants. Absent a significant deterioration in the labor market, it’s hard to imagine this fractured committee cutting anytime soon.
