Interest rates set to hold at Powell's final Fed meeting as chair

Key Points:

• The Federal Reserve is expected to keep interest rates steady at Wednesday's meeting, likely Chair Jerome Powell’s last as leader of the central bank, amid ongoing economic uncertainties and geopolitical tensions.
• Powell’s potential departure hinges on the closure of a politically sensitive criminal investigation related to Fed headquarters renovations, which the Justice Department recently decided to close but with the possibility of reopening.
• Senate Banking Committee is set to vote on advancing President Trump’s nominee, Kevin Warsh, to replace Powell, but Powell could remain on the Fed’s board as a governor until 2028, even after his chair term ends in May.
• The U.S. economy faces challenges including the war involving the U.S. and Israel against Iran, surging oil prices, inflation spikes, and a volatile labor market, complicating the Fed’s policy decisions.
• Market impact of Wednesday’s meeting is expected to be limited due to the anticipated leadership transition, with no updates to economic projections or policy rates expected, though Powell’s press conference will likely focus on economic uncertainty and the war’s fallout.