Fed Chair Powell: Last Meeting as Chair?

We may not learn much from today’s FOMC meeting, even though it appears this could be Jerome Powell’s final press conference addressing the nation as Chairman of the Federal Reserve.

Even before the Iran conflict began earlier this year, inflation had been gradually ticking higher, while the labor market showed limited job growth. This leaves the Fed in a difficult position regarding near-term rate cuts. More recently, the inflationary spike in energy prices has prompted Fed officials to adopt a more cautious tone on the outlook for interest rates through the remainder of 2026.

According to the FedWatch tool from CME Group, markets are pricing in an 86.6% probability that the target rate will remain in the 3.50%–3.75% range for the rest of the year. In fact, markets are so confident in this outlook that they are assigning a 0% probability to any rate hikes in 2026.

This confidence has helped support the equity market’s rally off the lows seen earlier this month. The FedWatch tool also suggests that only one rate cut is expected to be priced in by the end of 2027. While these expectations will evolve as new data emerges, equities—for now—appear to be signaling that the economy can sustain current rate levels for an extended period.

That said, credit spreads have widened slightly over the past week heading into today’s meeting. If Powell’s tone, or that of other Fed members, turns more hawkish in response to rising stagflation risks, which are inherently difficult for the Fed to address, we could see volatility begin to creep back into the equity markets.

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, or futures commission merchant.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.