FOMC Commentary – April 28, 2026

If a Federal Open Market Committee (FOMC) interest rate statement can be judged to be terse, it would be the one issued today (April 29) at the conclusion of meetings that were expected to be both highly interesting and boringly uneventful. Perhaps a more charitable description would put the statement in the category of “just the facts, ma’am”: economic activity is expanding, the unemployment rate remains low, inflation remains elevated, the dual mandate is our guide, and the target interest rate is left unchanged. There was very little in the statement to support any imaginative speculation about what comes next. However, four dissenting votes, including three who wanted to more clearly indicate that there is no bias towards cutting rates in the future (implying that these three members have no interest in cutting rates any time soon (pun intended)), signal exactly how “interesting” this meeting must have been.

It has always been anticipated that the main event on April 29 would be the press conference conducted by Chairman Jerome Powell. As has been stated many times in the lead-up to this meeting, this was viewed as Chairman Powell’s last press conference of his tenure. What may not have been anticipated was that Powell would state so clearly, at the start of this last meeting with the financial press, his intention to remain on the Board of Governors for an indeterminate time — until there is “finality and transparency” that the legal attacks on the Federal Reserve have ended. Ultimately, there was substantial discussion of this decision, with many questions highlighting the unusual nature of a retiring Chair staying on the Board and the possible (likely?) interpretation of this as a political statement. These questions, which were spread throughout the press conference and arguably overshadowed the usual discussion of economic variables, gave Chairman Powell an opportunity to discuss the importance of central bank independence in detail. There were actually a surprising number of questions about the precedence for central bank independence, and Powell met each with an almost fierce defense of both the institution and the people.

Always the gentleman, Chairman Powell was careful not to speak for or otherwise make presumptions for incoming Fed Governor (and Chair-in-waiting) Kevin Warsh. Whereas past conversations with the press have often centered on what Powell would be looking for in future data, he carefully avoided much of that discourse because of his desire to give Kevin Warsh complete freedom to express his views, avoiding any hint of confrontation. Given what we know of Jerome Powell, he will be up to this task of keeping a low profile and respecting the role of Chairman. As he mentioned, he has been “just a governor” before and that he is “going back to being just a governor”, which is a role that he sees as “trying to support the Chair, if you can. If you can’t, you can’t.”

Several interesting economic points were nevertheless made during the Q&A. First, the strong reiteration that the labor market is not a source of inflation and, unlike back in 2021 and 2022, does not have to be worried about as a source of inflation. Second, the economy is “amazingly resilient”, not, in a very poor choice of words by some reporter, “awfully resilient”, with business fixed investment especially strong. Third, and most important, inflation is “elevated” (this was an important and different description than some past press conferences) and is only partly due to the spike in energy costs associated with developments in the Middle East. It may have been lost on some that Powell stated that if tariffs are indeed a one-time transitory influence on inflation, then inflationary forces from tariffs should be declining in the next two quarters. This is the support for a wait-and-see attitude about interest rate cuts. However, this also sets up the possibility that the upward push on prices not associated with energy costs will NOT come off, in which case the Fed is looking at a very different environment than has been planned. If businesses are increasing prices because they can, the challenge for the Fed on interest rates will be significant — and significantly different than what has been built into their forecasts.

Finally, Chairman Powell explained the somewhat unusual amount of dissent on the FOMC  — the first time since 1992 that there have been four dissenting votes on an interest rate decision— as something to be expected given the uncertainty of not only the current economic supply shock from the war against Iran, but also the legacy of a large number of past supply shocks (Ukraine, pandemic, tariffs, etc.)  crammed into a relatively short span of economic time. These are “really tough, difficult judgments that have to be made. It is only natural to have a range of views.” Markets appear to be interpreting the dissent as confirming the belief that there will be no interest rate cuts this year, but there was nothing explicit in the press conference or FOMC statement to support this view. The next FOMC meeting will be Kevin Warsh’s first as Fed Chair, and it will also be accompanied by the Summary of Economic Projections (SEP), which includes the famous/infamous “dot plots” of inflation and interest rate forecasts. If a Chairman Warsh allows the SEP to go forward as planned, we will then learn a great deal more about the significance of this meeting’s dissents.