Federal Reserve Ends Powell Era Holding the Fed Funds Rate at 3,505/3.75%

The Federal Reserve held rates at 3.50% to 3.75%. Economic data related to employment and inflation has been very little changed over the last couple of months so it came to nobody's surprise that the Fed has held its target rate where it is.

The separate question is whether the Fed may need to raise interest rates as inflation expections are increasing as a result the dramatic rise in oil prices from the war in Iran.

While the Fed did not change its statement to move to a neutral stance, three Fed governors - Governors Logan, Kashkari, and Hammack - dissented to the statement continuing to have an easing bias (towards lowering rates). Trump's Stephen Miran also dissented as he has in every meeting since joining the Fed.

During Powell's press conference, he stated that he intends to continue as a Fed governor for a time after his Chairmanship role expires. He feels it is generally tradition for the ex-Chairman to remain a governor (although Janet Yellen, his immediate predecessor, did not) and that he can play an instrumental role in helping to new chairman to develop consensus of governors with widely disparate views.

Powell also stated that he completely understands and is sympathetic to the view of the three dissenting governors. As a result of that dissent and with Powell staying on the reserve, we could be shaping up for an interesting conflict with Kevin Warsh coming in as the new Fed Chair having committed to Trump that he will be lowering rates. The three governors who dissented today, with Powell and perhaps others, will be communicating that lower rates will not come unless and until the data justifies such a cut.