Federal Reserve holds rates as Kevin Warsh closes in on confirmation

The Federal Reserve kept interest rates steady Wednesday as President Trump’s new pick to lead the bank inched closer to confirmation.

By a vote of 8-4, the Federal Open Market Committee (FOMC) decided to maintain its baseline interest rate range between 3.5 percent and 3.75 percent at the end of what will likely be Jerome Powell’s final meeting as Fed chair.

Hours earlier, a Senate panel approved along party lines the nomination of Kevin Warsh to succeed him.

With the criminal probe into the Fed and Powell on ice for now, Warsh is on track to be confirmed by the full Senate before the end of his predecessor’s term as Fed chair in May and the next FOMC meeting in June.

“This accelerates the timeline for a Kevin Warsh confirmation and increases the likelihood that the April meeting will be Jerome Powell’s last,” wrote Stephen Kates, financial analyst at Bankrate, in a research note.

Warsh is generally considered more likely to support interest rate cuts than Powell has been, given Trump’s insistence that his next Fed chair support a looser approach to monetary policy.

Even so, Warsh may face challenges making his mark on the Fed as the bank faces a critical economic obstacle with no clear path forward.

Powell also said Wednesday he would stay on the Fed board as a governor after ceding the chair role to Warsh and would remain until he felt the Department of Justice (DOJ) probe was done for good.

The Fed chair vowed to keep a “low profile” as a governor and would seek to avoid overshadowing or undermining Warsh, whom Powell congratulated during his press conference.

“My concern is really about the series of illegal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors,” Powell said Wednesday.

“I’ve never suggested that such verbal criticism is a problem, and neither has anyone else here, but these legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of additional such actions,” he continued.

“I worry that these attacks are battering the institution, 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.”

Powell was joined by FOMC vice chair John Williams, as well as FOMC members Michelle Bowman, Lisa Cook, Philip Jefferson, Anna Paulson and Chris Waller, in voting to hold rates steady.

Three others — Beth Hammack, Neel Kashkari and Lorie Logan — supported the decision to keep rates the same but “did not support inclusion of an easing bias in the statement at this time.”

Stephen Miran, who was tapped by Trump to serve on the board last year, was the only member who voted for a 0.25 percentage point cut.

“The odds of rate cuts in 2026 appear slim as of today, and economic conditions are likely to keep them that way throughout the summer. Warsh will need to win over colleagues and gain the confidence of the markets to effectively carry out his role as chair,” Kates wrote.

Investors and analysts expected the Fed to hold steady Wednesday as skyrocketing energy prices foil the bank’s plans to keep bringing interest rates down. After cutting rates at three consecutive meetings to end 2025, the Fed paused in January and dug in further last month amid the war in Iran.

This comes as inflation has climbed amid the conflict with Iran, moving further away from the Fed’s target rate of 2 percent. Prices were up 3.3 percent year over year in March, as measured by the consumer price index, the highest annual inflation rate in nearly four years.

The war with Iran and the effective closure of the Strait of Hormuz have wreaked havoc on oil prices. Gas prices surged 21.2 percent in March, with overall energy prices up 10.9 percent.

The April meeting is widely expected to be the last Powell oversees, bringing to an end his tumultuous eight-year stretch leading the central bank. His tenure was marked by numerous fights with Trump, who has often voiced frustration with the Fed for not cutting rates as quickly as he would like.

The president’s long-running feud with the Fed chair was at the center of the delay in confirming his replacement. Powell revealed in early January that the DOJ had opened a criminal investigation into his handling of Fed renovations.

This prompted pushback from at least one key Republican, Sen. Thom Tillis (R-N.C.), who vowed to block Warsh’s nomination as long as the probe into Powell continued. Given his seat on the Senate Banking Committee, Tillis stood in the way of advancing Warsh to the full chamber.

After U.S. Attorney for the District of Columbia Jeanine Pirro announced Friday that the DOJ was handing off the investigation to the Fed inspector general and closing its probe, Tillis said he would back Powell’s replacement.

The Senate Banking panel voted 13-11 along party lines Wednesday morning to send Warsh’s nomination to the Senate floor, making him the first Fed chair nominee to be advanced to a confirmation vote without any bipartisan support.

“It’s no secret that the reason that Mr. Warsh’s nomination could have been held up is because of my concern with the investigation,” Tillis said after the vote. “I want to thank the Department of Justice for the assurances that they gave me.”

Sen. Elizabeth Warren (D-Mass.), the top Democrat on the committee, continued to voice opposition to Warsh on Wednesday, while slamming the impact of Trump’s policies on the economy.

“On the same day that the Senate is voting to advance Trump’s nominee to be his sock puppet at the Federal Reserve, the Fed is meeting to decide on interest rates,” Warren said in a statement.

“One man continues to stand in the way of lower interest rates and lower costs: Donald Trump,” she continued. “First, his chaotic tariffs and reckless economic policies hammered the job market and raised prices. And now, his war with Iran is driving costs even higher. The President is boxing out the Fed — and American families are paying the price.”

Updated at 2:16 p.m. EDT

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