Federal Reserve Chairman Jerome Powell made it clear on Wednesday that he plans to remain in his position until the political turmoil surrounding the central bank clarifies. Previously, the Fed kept the overnight lending rate unchanged in the range of 3.5% to 3.75%, adopting a wait-and-see approach to address pressures from multiple fronts.
The world's most influential central bank still indicated in its updated "dot plot" that a rate cut could come in 2026, although traders have lowered their expectations for a rate cut this year. This leaves investors in a perplexing situation: current rates remain stable, but the future direction is uncertain.
Before Powell's remarks, the market was already flooded with information. Influenced by the war in Iran, Brent crude oil prices surged, briefly surpassing $109 per barrel. Additionally, the Producer Price Index (PPI) for February exceeded expectations, further dampening hopes for a rate cut, leading the futures market to quickly reduce bets on recent easing policies.
At the press conference, Powell stated, "The forecast is that we will make progress on inflation, although not as much as we had hoped, there will still be some progress."
Powell emphasized that he has no intention of leaving before the investigation surrounding the Fed's headquarters renovation concludes. He said, "Regarding whether I would leave during the investigation, I have no intention of leaving the board until the investigation is truly concluded and transparency and final conclusions are achieved."
Senator Thom Tillis's position has become a major obstacle. He has broken party lines in Congress, repeatedly calling the Trump-supported Justice Department investigation "absurd," and has used his position on the banking committee to obstruct the nomination process of Warsh. Previously, a federal judge blocked subpoenas against the Fed, citing "almost no evidence."
After the ruling, Tillis stated, "This confirms how weak and reckless the criminal investigation against Chairman Powell is; it is merely a failed attack on the independence of the Fed."
As for whether he would continue to serve on the board after his term ends and the investigation concludes, Powell said, "I have not made a decision; I will choose based on what I believe is in the best interest of the institution and the people we serve."
Chairman Powell faces multiple challenges in balancing a weak labor market, inflation risks, and oil shocks triggered by war. For over a year, Trump and his allies have urged Powell and other Fed officials to cut rates more frequently, with pressures including social media attacks, angry television interviews, and allegations of misconduct. However, the direction of interest rates has not changed as a result. Powell pointed out that the Fed is trying to address two major issues simultaneously: the potential weakness in the labor market and the persistent risk of rising inflation.