The Federal Reserve is widely expected to stand pat on interest rates this afternoon, but perhaps more consequential is the fact that today's meeting will likely be Jerome Powell's last as its chair. The bigger question is whether Powell will choose to remain as a Fed governor, given his fierce defense of the central bank's independence.

Looking ahead: Powell's term as Fed chair will conclude May 15, but he could serve out his term as governor until 2028. This would be unusual as most Fed chairs in the past left completely when their terms ended. "It seems likely that he will stay on as a Fed governor, at least for a while," Heather Long, chief economist at Navy Federal Credit Union, told Seeking Alpha. Powell previously said he wouldn't leave until the Department of Justice's investigation into the Fed's renovation project was "well and truly over." The DOJ dropped its probe last week, but it hasn't so much resolved as shifted to another overseer, which could leave enough doubt in Powell's mind to stay on. Meanwhile, the Senate Banking Committee will vote today on advancing ​Kevin Warsh's nomination as Fed chair to the full Senate for final confirmation.

Another pause: Traders are pricing in a 100% probability of the Fed maintaining the federal funds rate at 3.50%-3.75%, according to the CME FedWatch tool. Even more telling, the market is pricing in no rate change for the rest of the year, compared with the start of 2026, when traders were pricing in two 25 basis-point rate cuts. As always, traders, economists, and other Fed watchers will be focused on any forward guidance the FOMC may provide in its statement. In the minutes for the March meeting, there was some debate on whether its statement should include language that the next rate move could be either a cut or a hike. One reason to keep rates unchanged is the uncertainty over how the Iran war will affect inflation. Another major reason is the upcoming succession. "You don't want to rock the boat before you're handing the Fed over to the new chair," Navy Federal's Long said.

SA commentary: The argument in favor of the Fed's pause is that the war's inflationary effects are unclear, according to SA analyst TMC Research. "Although most forecasters expect higher inflation in the near term, economists are debating how long the run-up in pricing pressure will last, and how forcefully the Fed should react, if at all," they said. "The risk is that the central bank repeats the mistake of responding too slowly to the 2021-2022 inflation spike." As for Powell's successor, SA analyst James Picerno said Warsh is set to face a perfect storm of challenges - fallout from the Iran war, tariff impacts and massive federal debt. "Given the war‑driven shifts in the inflation backdrop, cutting rates will be a difficult case for Warsh to make to his fellow policymakers. That may set up a new conflict with Trump, who has been publicly pushing for rate cuts," he added.