Powell to remain on the Fed board after chair term ends, blocking a Trump pick

Key Points:

• Federal Reserve Chair Jerome Powell announced plans to remain on the Fed board as a governor after his chair term ends next month, marking the first time since 1948 a chair stays on the board, citing concerns over political attacks threatening the Fed's independence.
• Powell’s continued presence on the board could complicate the agenda of President Trump's nominee for Fed chair, Kevin Warsh, particularly regarding the rate cuts Trump has demanded, as Powell may influence consensus within the Fed.
• The Fed kept its benchmark interest rate unchanged for the third consecutive meeting but showed openness to future cuts amid economic uncertainty and elevated inflation, with notable dissent among Fed officials on the decision.
• Powell expressed ongoing concern about the Fed's independence from political pressure, highlighting ongoing legal and investigative challenges related to the Fed’s operations, and emphasized the need for transparency before deciding when to leave the board.
• The economic outlook remains uncertain with inflation rising to 3.3%, job growth slowing, but unemployment low at 4.3%, complicating the Fed's decisions on interest rates amid conflicting signals from inflation and labor market conditions.