Powell’s Final FOMC Meeting: Wins, Mistakes, and the Legacy Left to Kevin Warsh

Powell’s Final FOMC Meeting: Wins, Mistakes, and the Legacy Left to Kevin Warsh

Jerome Powell is set to lead his final FOMC press conference this Wednesday, closing an eight-year chapter as Chair of the Federal Reserve. He leaves office with interest rates held between 3.50% and 3.75%, while headline inflation has returned to 3.3%.

His successor, Kevin Warsh, selected by Donald Trump, will take control of a central bank facing several unresolved challenges. These include rising CPI pressures driven by oil prices, a $6.7 trillion balance sheet, and a crypto market that remains highly sensitive to Federal Reserve liquidity decisions.

Powell vs Yellen: A Very Different Legacy

When Janet Yellen handed leadership to Powell in February 2018, conditions were relatively calm. Rates were near 1.5%, inflation was close to the 2% target, and the Fed had already begun reducing its balance sheet in a measured way.

Powell entered the role from a legal and private equity background rather than academic economics. He initially continued gradual rate hikes in 2018 before shifting course due to trade war risks.

Yellen’s four-year term avoided recession and major disruption. Powell’s eight years, however, included a pandemic shutdown, the largest balance sheet expansion in Fed history, the worst inflation since 1981, and multiple regional bank collapses.

The Biggest Successes

Powell’s strongest moment is often considered March 2020. During the pandemic crisis, the Fed quickly cut rates to zero, restarted asset purchases, and launched emergency lending facilities within weeks.

That aggressive liquidity response stabilized financial markets and helped fuel a major recovery in risk assets. Bitcoin surged from around $5,000 in March 2020 to over $69,000 in late 2021 as the Fed’s balance sheet expanded toward $9 trillion.

Another achievement was guiding the most aggressive tightening cycle since Paul Volcker without causing a deep recession. Rates moved from near zero to 5.5%, yet the labor market avoided collapse.

Later, Powell also softened his tone toward digital assets, famously comparing Bitcoin to “virtual gold,” a statement that boosted market optimism.

The Main Failures

Powell’s most criticized mistake was describing inflation in 2021 as “transitory.” The Fed waited until March 2022 to begin hiking rates, even as CPI rose above 7%.

That delay forced the central bank into 11 rate hikes in only 16 months. The rapid pace of tightening exposed weaknesses in regional banks, contributing to the failures of Silicon Valley Bank, Signature Bank, and First Republic in 2023.

Communication problems also hurt confidence. Forward guidance became less predictable, and trust in Fed projections weakened among traders and investors.

What Kevin Warsh Inherits

Warsh steps into a Federal Reserve that remains restrictive. Rates have stayed unchanged for three consecutive meetings, and recent projections suggest only one rate cut in 2026 and another in 2027.

Inflation risks are also returning. CPI rose to 3.3% in March after higher gasoline prices linked to geopolitical tensions.

Warsh has promised a different approach. He supports a leaner Fed balance sheet and believes a smaller central bank footprint could help lower rates, control inflation, and strengthen growth.

These signals suggest faster quantitative tightening rather than immediate rate cuts.

Impact on Crypto Markets

Crypto traders face a mixed outlook. Warsh appears more hawkish on inflation than Powell, but more supportive of digital assets.

He has described Bitcoin as a sustainable store of value, rejected the idea of a retail central bank digital currency, and acknowledged that crypto is already part of the U.S. financial system.

However, tighter monetary policy could pressure Bitcoin in the short term. Over time, a stronger anti-inflation stance may also increase demand for non-sovereign assets like BTC.

What Markets Will Watch

Powell’s final press conference will be closely analyzed for:

• Hints about future rate cuts
• Views on rising inflation pressures
• Whether the transition to Warsh appears smooth or controversial

If Powell fully steps aside in May, the next FOMC meeting would mark the beginning of the Warsh era.