Fed Chair Powell’s Second-to-Last Meeting: Few Clues Expected for Wall Street

In just a few months, a new leader will take the podium at the U.S. Federal Reserve following its policy meetings. Jerome Powell likely has only a handful of press conferences remaining before his tenure as central bank chair concludes—a milestone he may be looking forward to reaching.

With Powell’s term scheduled to end in May (barring any legal delays stemming from a Department of Justice probe), the chairman is set to lead the Federal Open Market Committee (FOMC) sessions this week and in April. After that, he is expected to step down, likely making way for Trump nominee Kevin Warsh.

Despite the drama surrounding Powell’s final year at the helm, Wall Street does not anticipate any major surprises from these upcoming meetings. The FOMC has recently been divided over the pace and depth of potential rate cuts, and recent military activity in Iran has added further uncertainty to the economic outlook.

Geopolitical instability has intensified since the U.S. and Israel conducted strikes in Iran 17 days ago. In the aftermath, oil prices have climbed as investors evaluate the potential for supply disruptions in the region. Rising energy costs have a direct effect on households, causing inflation expectations to spike as consumers search for signs of de-escalation that have yet to appear.

Due to rising price expectations and a lack of fresh data regarding the current state of the economy, analysts widely expect Jerome Powell to announce that rates will remain unchanged this week. Currently, CME’s FedWatch tool indicates a more than 99% probability of a hold at this meeting.

While this week is packed with central bank activity—including meetings for the Fed, the European Central Bank, the Bank of Japan, and the Bank of England—there is a widespread belief that a “wait-and-see” strategy will continue. Economists are not expecting major news from Powell’s press conference; Deutsche Bank’s Jim Reid informed clients that his team anticipates only minor adjustments to the official statement, such as refined language regarding labor data and a mention of geopolitical risks and their impact on inflation.

An overly hawkish picture?

Reid further noted that Powell’s briefing will likely emphasize that recent global events primarily affect the economy through financial conditions, specifically oil prices. However, economists believe he will avoid indicating any significant changes to the policy outlook in the near future.

Some analysts have even proposed that rate cuts might not occur at all in 2026, noting that a new, more dovish chairman represents only one vote on the FOMC. However, Antonio Gabriel of Bank of America Global Research suggested this morning that hawkish inflation predictions might be overshadowing the Fed’s actual trajectory.

Gabriel noted that the assumption that the Fed will not cut rates relies on the idea that geopolitical tensions are temporary—a short-term disruption that won’t broadly affect the global economy. The BofA economist is skeptical, suggesting that markets may be underestimating the potential for a more prolonged conflict.

“While a rapid end to the hostilities is possible, we believe the conflict lasting into the second quarter is just as probable, and a longer war cannot be dismissed. However, markets appear to be pricing in a mostly temporary shock,” Gabriel said. “The U.S. dollar has strengthened, but the S&P 500 remains just 4% below its record high, and markets have reduced expectations for Fed cuts by about 35 basis points due to inflation worries. In our view, the risks of more significant disruptions to global growth are being overlooked.”