Fed Officials Remain Cautious on Rates Before Meeting
Fed officials expect to hold rates steady at the April meeting. Policymakers remain cautious about cutting costs as they monitor inflation and oil price risks.
Federal Reserve policymakers in the United States are signaling a cautious approach to monetary policy as they prepare for their upcoming meeting on April 29-30. While a reduction in the policy rate remains a possibility for 2026, many officials indicate that the timing depends on the duration of the conflict in Iran and the resulting pressure on Brent Crude Oil prices. The current policy rate target range stands at 3.50%-3.75%, with the median projection from March suggesting a single quarter-percentage-point cut by the end of the year. Jerome Powell, the Federal Reserve Chair, has maintained a centrist position, emphasizing that the current policy stance is well-positioned given recent geopolitical developments. > We feel like our policy is in a good place for us right now as a result of the Iran war. Other centrist voices, including New York Fed President John Williams and Cleveland Fed President Beth Hammack, have echoed this sentiment. Williams noted that policy is not on a pre-set course and will be adjusted based on incoming economic data. Michael Barr, the Vice Chair for Supervision, has expressed specific concerns regarding the stability of inflation expectations. > I am particularly concerned that inflation expectations could increase longer-term inflation expectations. The dovish faction of the committee, which includes Governor Lisa Cook and Stephen Miran, remains focused on supporting the labor market. Cook suggested that while inflation continues to trend toward the 2% target, the risks to employment may warrant rate cuts later this year. > I would argue that the underlying inflation is going to continue to move toward 2%, but I do think that there’s two-sided risk to the labor market later this year when the outlook is more steady. In contrast, hawkish members such as Christopher Waller and Michelle Bowman have voiced concerns about persistent inflationary pressures. Waller noted that he remains cautious about rate cuts, citing a forecast where inflation risks are greater. Bowman pointed to rising energy costs as a significant hurdle for the central bank's inflation goals. > Because of the energy prices, even before or the end of 2026 hopefully inflation will be well above 3% over the next few months. This hawkish sentiment is shared by Austan Goolsbee of the Chicago Fed and Jeffrey Schmid of the Kansas City Fed. Goolsbee remarked that if inflation remains elevated, the timeline for rate cuts could be pushed out of 2026 entirely. Mary Daly of the San Francisco Fed also highlighted the complicating factor of energy prices. > We had work to do before we had the oil price shock; with the oil price shock, the work just takes longer. The Federal Open Market Committee (FOMC) is currently undergoing a period of transition. Donald Trump has nominated former Fed Governor Kevin Warsh to succeed Powell as chair in May. The committee's overall stance has trended toward hawkishness over the past year. According to Reuters tracking, the number of hawks on the committee has increased from zero in mid-2025 to three as of April 2026, while the number of centrists has decreased from thirteen in late 2024 to six today.
