Fed Decision & Powell's Final Meeting: Rates Stay Steady Amid War-Driven Inflation
The Federal Reserve holds interest rates steady at 3.5%-3.75% on April 29, likely Jerome Powell's final meeting as chair. The decision comes as inflation climbs to 3.3% due to war-driven oil prices and a weak labor market, leaving policymakers balancing competing pressures.
Fed Holds Rates as Powell Steps Down
The Federal Reserve announced its third rate decision of 2026 on Wednesday as officials confronted rising inflation, a lackluster job market, and what is likely Jerome Powell's final meeting as chair. The overwhelming consensus among economists is that the FOMC will hold rates steady, with the CME Group's FedWatch tool showing a 100% probability the Fed will keep its target rate within its current range of 3.5% to 3.75%.
Inflation Challenge Complicates Outlook
Inflation has jumped to 3.3%, a two-year high, as the Iran war has sharply raised gas prices, making it harder for the central bank to reduce rates. High oil prices are seen pushing up inflation by 0.6 percentage point this year while pushing down growth by a half point, and 81% believe crude prices are likely to drive up core inflation as well, compounding the difficulty of cutting rates for the Fed.
Labor Market and Leadership Uncertainty
While the job market isn't particularly strong, it's not weak enough to convince the Fed to cut, with one economist noting the labor market is "plugging along without much steam, but it's still plugging along." Powell is set to step down as Fed chair when his term concludes on May 15, and he's expected to be replaced by Kevin Warsh.