I'm not leaving! Powell's final battle, the Federal Reserve is in chaos!

In the early hours of May 1st, the Federal Reserve's interest rate decision was finally announced, with the federal funds rate target range remaining locked at 3.5% to 3.75%, marking the third consecutive time keeping rates unchanged.
Compared to this unsurprising decision, the market is more concerned about Powell's future and Waller's power transition, as this supposed smooth handover of power is turning into an unprecedented internal struggle, breaking the Fed's 75-year tradition.
In Powell's last interest rate meeting before stepping down, he dropped a bombshell: after resigning as chair, he will continue to serve as a board member until early 2028, breaking the 75-year convention of Fed chairs leaving immediately after stepping down.
This decision put Trump's nominated successor, Kevin Waller, in an awkward position, as he will face not an institution in a power vacuum, but a dual-chair scenario—an unprecedented scene in Fed history.
Even more shocking was the voting result: out of 12 voters, 8 supported maintaining rates, 4 opposed, the highest opposition since 1992, setting a 34-year record.
The cracks have been widening for some time—2 votes against in July 2025, 2 in October, 3 in December, and now 4 votes—divisions have gradually expanded, finally erupting in Powell's final act.
Cleveland Fed President Loretta Mester, Minneapolis Fed President Kashkari, Dallas Fed President Logan lean toward rate cuts but add a "dovish" tone in their statements, while Board member Milan directly advocates for rate cuts.
These dissenting votes are less about questioning the rate decision and more about an early warning to the new chair Waller.
As Trump's appointee, Waller's nomination was narrowly approved by the Senate Banking Committee with a 13:11 party-line vote, with Democrats voting unanimously against.
He faces internal division even before taking office, and Powell's continued role as a board member tilts the power balance further, making Trump's hopes of controlling monetary policy through Waller unlikely.
The collision of two policy philosophies fundamentally reflects disagreements over the future of the U.S. economy—this internal discord is more destructive than simple rate hikes or cuts.
The Fed's credibility is wavering, and as the world's most influential central bank, its internal fractures are triggering market panic.
Wall Street's expectations have fundamentally shifted—JPMorgan and other institutions have ruled out rate cuts in 2026, instead predicting that rates may need to rise in 2027 due to rising oil prices and inflation pressures.
Futures markets show a 40% chance of rate hikes before April 2027; if oil prices continue to rise, this probability could soar to 80-90%.
Brent crude oil is approaching $110 per barrel, tensions in the Middle East are intensifying energy supply risks, and inflation pressures are resurging, making rate cut expectations a pipe dream.
All of this is bad news for Trump—U.S. national debt has surpassed $39 trillion, with a debt-to-GDP ratio of 100.2%, the highest since 1946.
If the Fed shifts to rate hikes, it will significantly increase government debt interest payments, which could approach $1.3 trillion in fiscal 2026—more than double U.S. military spending.
On one side, ongoing war support is increasing; on the other, debt burdens are mounting.
The Trump administration faces a dual challenge of fiscal and monetary policy, and the Fed's internal division makes this challenge even tougher.
After taking office, Waller will face a "dual challenge": balancing inflation and economic growth while managing internal power struggles within the Fed.
He has expressed opposition to "forward guidance" style policy communication, advocating for flexible decision-making based on the latest data, which differs significantly from Powell's policy framework.
Powell remaining on the board means he will continue to have voting rights and influence, potentially opposing Waller's policies at any time—this "dual core" structure may become the norm for the Fed in the near future.
For ordinary investors, it is necessary to reduce risk appetite and avoid blindly chasing highs; for businesses, strengthening exchange rate risk management and preparing for market volatility are essential.