Powell's farewell without stepping down, rare internal disagreements, how will the future market move?

Shaw, Golden Finance

In the early morning of April 30, 2026, the last FOMC meeting of Powell’s tenure as Federal Reserve Chair concluded, with the Fed maintaining interest rates at 3.5%-3.75%, in line with market expectations. This is the third consecutive rate hold announced this year. During this meeting, the Fed described inflation as “still somewhat high,” rather than “slightly high” as in previous statements, citing global energy prices as the reason. The policy vote resulted in an 8-4 split, the most divided decision since 1992. Among the 12 FOMC voting members, Milan voted against, advocating for a 25 basis point rate cut; Hamrick, Kashkari, and Logan also voted against, opposing language in the statement that indicated easing bias. Subsequently, Powell stated at his final press conference that he will remain on the board after May 15 and that he will leave the Fed at an appropriate time.

After the Fed’s decision was announced, U.S. Treasuries, stocks, and gold declined. Before the statement, stocks, Treasuries, and gold fell intraday, while the dollar index rose. Following Powell’s press conference, spot gold dropped 1%. WTI crude oil rose about 8.2%, with Brent futures reaching their highest since June 2022. Treasuries were sold off, the dollar strengthened, and gold and cryptocurrencies retreated in tandem.

In Powell’s final FOMC meeting of his term, as expected, he remained on hold, but it revealed deeper divisions within the decision-making body. Concerns over inflation driven by the energy crisis caused by the Iran situation remain unresolved. Can Powell and Kevin Wirth smoothly transfer power? How will the market interpret this decision, and what does the future hold?

1. Powell’s last decision remains on hold, market no longer bets on rate cuts

Early this morning, Powell’s final FOMC meeting as Fed Chair concluded, with the benchmark rate maintained at 3.5%-3.75%, consistent with market expectations. This is the third rate hold announced this year, and this level has persisted since the last cut in December 2025. In the statement, the Fed described inflation as “still somewhat high,” rather than “slightly high,” mainly due to recent rises in global energy prices. The statement noted that, on average, employment growth remains subdued. The committee seeks to achieve maximum employment and 2% inflation over the long term. The development of the Middle East situation adds significant uncertainty to the economic outlook. The committee remains highly attentive to risks to its dual mandate (full employment and price stability).

Before the decision, market expectations for a rate cut before 2027 had significantly cooled. Kalshi’s prediction market pricing showed that the probability of a rate cut before 2027 is now only about 50%, down sharply from 80-90% earlier this year. After the decision, market pricing indicates a higher likelihood of rate hikes than cuts this year. According to the Wall Street Journal, after some hawkish signals from Fed officials, Wall Street traders are betting on a possible rate hike this year, though the chance remains small. CME interest rate futures show traders believe there is an 11% chance of a rate hike this year, up from 5% earlier in the day and 0% on Tuesday, while the chance of a cut hovers around 2%. The latest CME “FedWatch” data indicates a 98.6% probability that the Fed will keep rates unchanged through June, with a 1.4% chance of a 25 basis point cut. In July, the probability of no change is 96.5%, with a 3.4% chance of a cut; in September, 96.1% for no change and 3.8% for a cut. Market predictions on Polymarket show bets on whether the Fed will cut rates again in 2026. After the decision, the market’s expectation that the Fed will not cut rates this year has risen sharply to 58%. The probability of three rate cuts this year has fallen to 6%.

Following the Fed statement, amid the largest internal split in decades, Treasuries, stocks, and gold declined. Before the statement, stocks, Treasuries, and gold fell intraday, while the dollar index rose. After Powell’s press conference, spot gold dropped 1%. WTI crude surged about 8.2%, with Brent futures reaching their highest since June 2022. The surge in oil prices, combined with hawkish signals from the Fed, led to Treasuries being sold off, the dollar strengthening, and gold and cryptocurrencies retreating. Spot gold fell 1.15%, continuing its downward trend, while spot silver declined 2.44%. U.S. stocks saw the Nasdaq rise 0.04%, the S&P 500 fall 0.04%, and the Dow drop 0.57%. Cryptocurrency markets also came under pressure. Bitcoin experienced a V-shaped move, initially rising 1.8%, then falling nearly 3% from the daily high, briefly dropping below $75k. Ethereum declined 2.4% intraday.

With Powell’s term ending in May, the last FOMC meeting showed the Fed’s continued stance as expected, but also revealed larger internal disagreements over policy paths and economic outlooks. The Iran situation’s energy crisis remains unresolved, and inflation concerns persist. Whether Powell and Wirth can smoothly transfer power, and the ongoing conflicts with the Trump administration, add further uncertainty.

2. Largest internal split in 34 years, amplifying uncertainty

The statement from this FOMC meeting showed little change from the March meeting in its outlook on the U.S. economy. The Fed described inflation as “still somewhat high,” rather than “slightly high,” mainly due to recent increases in global energy prices. The statement noted that, on average, employment growth remains subdued. The committee seeks to achieve maximum employment and 2% inflation over the long term. The development of the Middle East situation adds significant uncertainty to the economic outlook. The committee remains highly attentive to risks to its dual mandate (full employment and price stability). The statement emphasized that recent indicators show economic activity expanding at a steady pace. Employment growth remains low on average, with the unemployment rate nearly unchanged in recent months. When considering further adjustments to the federal funds rate, the committee will carefully evaluate the latest data, evolving economic outlook, and risk balance.

This rate decision resulted in an 8-4 vote, the largest opposition since October 1992. Among the 12 FOMC members, Fed Governor Stephen I. Miran again voted against, advocating for a 25 basis point cut; three regional Fed presidents also voted against, including Cleveland’s Beth M. Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie K. Logan, who supported holding rates steady but opposed including language in the statement that indicated easing bias.

This meeting exposed greater internal disagreement over whether to continue cutting rates. With Powell’s term ending soon, whether Wirth can succeed smoothly and whether internal divisions will ease remains uncertain.

3. Powell’s farewell but not departure, vows to maintain independence

At the subsequent press conference, Powell, who will step down as Fed Chair on May 15, responded to questions about inflation data, rate paths, and recent political pressures on the Fed. He stated that the current policy stance is appropriate and conducive to achieving the Fed’s goals. Powell said the U.S. economy remains resilient, but employment growth is slow, and the unemployment rate has changed little. Consumer spending remains robust. He emphasized that the development of the Middle East situation introduces high uncertainty, and risks to both mandates remain. The Fed’s long-term inflation expectations remain aligned with the 2% target. Powell expressed full trust and congratulations to his successor, Wirth, calling it a “very normal, standard transition.” But he also announced that he will continue to serve as a board member after May 15 and will leave the Fed at an appropriate time. He promised not to hinder the new chair’s policies and to avoid being a “shadow chairman.”

In response to questions, Powell said the Fed’s independence is under threat and must be respected in the boundary between the Fed and the Treasury. If the Fed makes politically motivated decisions, market confidence will be lost. Regarding inflation, Powell attributed it to energy conflicts and tariffs. He acknowledged that in the short term, this will push up overall inflation and could even harm GDP by reducing consumers’ disposable income, but before that, the Fed does not need to rush to change rates or forward guidance. Powell noted that the number of officials supporting a shift toward a neutral stance has increased, and the next meeting might consider changing the current easing bias. Rate guidance could change then. He also said that if a rate hike is needed, signals will be issued, but currently, no one is calling for a rate increase.

Powell’s farewell but not “leaving,” shocks the market. Whether the Fed’s power can transfer smoothly, and whether conflicts with the Trump administration will continue, all add more uncertainty to the market.

4. How to interpret this Fed decision and Powell’s statements

Regarding this Fed decision and Powell’s comments, “The Fed’s mouthpiece,” Wall Street Journal reporter Nick Timiraos, said these disagreements highlight the complex situation Wirth faces as he prepares to take over. He must handle internal divisions over the rate path and new inflation risks from energy shocks. Over the past month, several policymakers have pointed out that, amid rising energy costs from the Iran conflict and the possibility of continued increases, the pause in rate adjustments could be extended. Although most officials expected a slight rate decline by the end of the year at the March meeting, current uncertainties are disrupting this outlook. More aggressive scenarios have also been proposed by some officials: if inflation pressures persist or intensify, rates might need to be raised again. This suggests that the process of tightening from 2022-2023, with high rates suppressing inflation and then gradually easing, may be delayed or adjusted.

U.S. Treasury Secretary Yellen said that if Powell remains on the Fed Board, it would be unusual. For someone who emphasizes regulation, his unilateral decisions diverge from tradition. Kevin Wirth will bring new momentum to the Fed with clear responsibility, effective management, and prudent policy-making.

CICC research report states that, from a fundamental perspective, the Fed should and needs to cut rates about twice, which is why we are more optimistic than the market about rate cuts. As long as oil prices do not stay above $100 until the end of the year, the high base effect will help inflation fall, providing room for rate cuts. But in practice, oil prices and Trump’s cooperation are crucial. The prolonged high oil prices caused by the Iran situation, and Powell’s ongoing investigations out of concern, create divisions within the Fed that Wirth cannot resolve alone in June. The key factor is Trump; if a quick compromise is reached and investigations end, rate cut prospects will gradually open.

JP Powers, CIO of Rwa Wealth Partners, said, “This is the first time in over 30 years that so many dissenters have appeared; it’s a crazy time. Milan is somewhat independent, wanting to cut rates further now. I believe that with oil prices back above $100, it’s very difficult for the committee to reach consensus. Also, with Powell’s transition, pushing such measures is quite difficult. Interestingly, the other three members even oppose including a dovish bias in the statement, which is probably the main point here.”

Analyst Anstey noted that we seem to be entering a new territory, requiring more time to understand the current situation. The only dissent on rate policy is Milan, who wants a 0.25% rate cut. The other three—Hammack, Kashkari, and Logan—think holding rates steady today is appropriate. Interestingly, these three dissenters interpret the language as leaning toward easing, because, literally, it’s neutral: the committee will adjust its stance as appropriate based on actual conditions to avoid risks that could hinder its goals. The goals, of course, are stable prices and full employment. But I think these three see this language as mainly relevant to employment tasks.

Analyst Anna and Stuart pointed out that the decision to hold rates steady was expected, but the notable aspect was the dissenting votes. Ironically, Powell—likely his last meeting as Fed Chair—led the most dissent. The statement also raised inflation from “somewhat elevated” to “high,” highlighting the internal divisions. This underscores the challenge Wirth faces in achieving the rate cuts Trump desires. Unless there is a major deterioration in the labor market, it’s hard to imagine this divided committee acting quickly to cut rates.

Economist Thomas Ryan of Capital Economics said Powell’s decision to stay on as Fed Chair “overshadowed” this rate decision—this move will also force Trump ally Milan, who votes for rate cuts, to leave, with Wirth expected to succeed Milan’s board seat.

Laura Cooper of Nuveen stated in a report that the Fed’s patience this week is prudent, and its policy stance is well-positioned. She noted that March data showed resilience—from robust employment to controlled inflation and optimistic retail sales—indicating U.S. consumers can absorb energy shocks. Cooper said, “Financial conditions remain favorable, so the Fed’s data-dependent stance may stay unchanged.”

5. Market outlook

The final decision of Powell’s last term has been announced. How will major asset markets, including cryptocurrencies, move in the future? Let’s look at some key analyses.

1. Hong Kong Monetary Authority responded to the Fed’s decision, stating that maintaining rates aligns with market expectations. The market generally sees significant uncertainty in U.S. monetary policy direction, depending on inflation trends and employment, especially with ongoing tensions in the Middle East keeping oil prices high, and the impact on U.S. inflation still uncertain. In Hong Kong, the monetary and financial markets remain orderly. HKD interest rates under the linked exchange rate system tend to follow U.S. rates, while short-term rates are influenced by local market liquidity, seasonal factors, and capital market activities. The future rate path in the U.S. remains uncertain and will affect Hong Kong’s interest rate environment. Citizens should consider and manage interest rate risks when making property, investment, or borrowing decisions. The HKMA will continue to monitor market changes and maintain monetary and financial stability.

2. Adrian Fritz, Chief Investment Officer of 21Shares, said that spot Bitcoin ETF continues to attract inflows, reinforcing Bitcoin’s core position in institutional asset allocation, even as prices hover below $80k. Fritz pointed out that since the start of the year, Bitcoin ETFs have absorbed nearly $2 billion, from retail, institutional, and hedge fund arbitrage and options trading. As traditional asset managers like Morgan Stanley accelerate their crypto strategies, digital assets are increasingly included in multi-asset portfolios. Bitcoin’s daily trading volume now exceeds $50 billion, with liquidity approaching that of large tech stocks like Nvidia. The ETF mechanism provides both primary and secondary market liquidity, gradually giving it “institutional asset” qualities. Despite macro and rate pressures, Fritz believes ETF inflows have shifted from speculative to structural demand, and with geopolitical improvements, ongoing inflows, and short covering, Bitcoin could challenge $100k within the year. Meanwhile, altcoins are diverging more, and the market is shifting toward assets with stronger fundamentals and cash flow.

3. Coinbase and Glassnode’s latest global investor survey shows over 70% of crypto investors believe Bitcoin is undervalued, with 82% of institutional and 70% of retail investors seeing the market as “post-bear market” or “value retracement.” Additionally, the proportion of realized market cap held by short-term holders (1 week to 1 month) has fallen to 3.91%, close to the level when Bitcoin was around $27k in October 2023. Analysts interpret this as a decline in speculative activity, suggesting Bitcoin may be entering a “value accumulation zone.”

4. Billionaire hedge fund manager Paul Tudor Jones called Bitcoin the “best inflation hedge” and warned that stock valuations are excessively high.

5. Trump’s son Eric Trump predicts Bitcoin will reach $1 million. “It’s uncertain whether it will be in 2030 or 2031, but I fully believe it can hit that level. I’ve never been so optimistic about this asset in my life.”