Farewell Powell, Welcome Dissent

While central bank policy remained unchanged at Jerome Powell’s last meeting as chair of the Federal Open Market Committee on April 29, it drew dissents from four of the 12 voting members—the most since 1992. Three regional Fed presidents approved of the decision to hold rates steady but wanted to remove language they believe suggested an easing bias. Governor Stephen Miran, as usual, called for a rate cut.¹

His successor Kevin Warsh, though widely viewed as a mainstream pick for the job, raised eyebrows during his recent hearings before Senate Banking Committee when he testified about his desire to promote “regime change” at the Fed. Details on his objectives were scarce, however, and many are contradictory. My expectation is that any operational changes under Warsh, whose term begins May 15, are likely to be gradual.

In a noteworthy break from historical precedent, Powell announced that he would stay on the Fed board as a governor when his term as chair ends. While chairs tend to resign in order to avoid overshadowing their replacements, Powell stated the he will leave the board only when the investigation into his handling of the Fed headquarters’ renovation, which now sits with the Fed’s inspector general, is “well and truly over, with finality and transparency.”² I would not be surprised if Powell remained though year end—i.e., past the midterm elections.