Powell’s Final Fomc: Grading His Wins, Losses, And The Mixed Bag He Leaves For Trump’s Fed Pick Kevin Warsh

What Happened

Jerome Powell will gavel his last FOMC press conference on Wednesday, closing eight years atop the Federal Reserve with rates frozen at 3.50 to 3.75 percent and headline inflation back at 3.3%.

Powell vs Yellen: The Inheritance Gap

Janet Yellen handed Powell calm waters in February 2018. Rates sat near 1.5%, headline inflation hugged the 2% target, and the balance sheet was already shrinking by design.

Market Context

His successor, Kevin Warsh, Trump’s pick, walks into a corner office stacked with unfinished business, an oil-driven CPI spike, a $6.7 trillion balance sheet, and a crypto market that learned to live and die by Fed liquidity.

That liquidity wave saved markets and arguably saved Bitcoin’s first institutional cycle. Bitcoin (BTC) climbed from roughly $5,000 in March 2020 to a November 2021 peak above $69,000, tracking the expansion of the Fed’s balance sheet toward $9 trillion.

The “transitory” call of 2021 still defines the criticism. Powell waited until March 2022 to start hiking even as Consumer Price Index (CPI) prints exceeded 7%, a delay Warsh has called a “fatal policy error.”

Warsh inherits a Fed running on tighter liquidity than markets had hoped. The federal funds target sits at 3.50 to 3.75% for a third straight meeting, and the March dot plot still pencils in only one cut for 2026 and one for 2027.

Inflation is moving the wrong way. CPI jumped to 3.3% in March from 2.4% in February after a 21.2% monthly spike in gasoline prices tied to the Iran war.

Why It Matters

“JAYPOW [Jerome Powell] might have broken US banking system. 2008 it was a banks portfolios of bad credit – aka subprime. 2023 it was banks portfolios of long duration bonds like UST and MBS??? If it goes down then remember Mar ‘20, big down, bailout, then big up! My body is ready,” said Arthur Hayes in a March 10, 2023 post.

Details

Powell took over as a former lawyer and private equity executive, not an academic economist. He inherited a soft landing in progress and tried to keep it going with gradual hikes through 2018 before the trade war forced a pivot.

Yellen’s four years produced no recessions and almost no surprises. Powell’s eight years included a pandemic shutdown, the largest balance sheet in history, the worst inflation reading since 1981, and three regional bank failures inside ten days.

The Wins: From Pandemic Rescue to a Near-Soft Landing

Powell’s defenders point to March 2020 as his strongest hour. The Fed cut rates to zero, restarted asset purchases, and stood up nine emergency lending facilities in less than three weeks.

“Powell pushed back against some mild hawkish resistance to the jumbo emergency rate cut on March 15, 2020,” highlighted economist Nick Timiraos.

The second redemption arc came later. Powell ran the most aggressive tightening cycle since Paul Volcker, taking the policy rate from zero to 5.5% without triggering a deep recession or a labor collapse.

By late 2024 he also reframed the official tone on digital assets. At the DealBook Summit, Powell called Bitcoin “like gold, only it’s virtual,” a single sentence that helped push BTC above $103,000 inside a session.

“It’s just like gold only it’s virtual. People are not using it as a form of payment, or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold,” Powell said.

The Losses: Transitory Inflation and the Bank Scare

“Once you let inflation take hold in the economy, it is more expensive and harder to bring it down, and so the fatal policy error going back four or five years is still a legacy that we are dealing with… we need a regime change in the conduct of policy,” stated Kevin Warsh, testimony before the Senate Banking Committee, April 21

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The late start forced 11 hikes inside 16 months. That pace caught regional lenders flat-footed, and Silicon Valley Bank, Signature Bank, and First Republic all failed in March 2023 after losses on long-duration Treasuries.

Communication missteps deepened the damage. Forward guidance became a moving target through 2022 and 2023, and trader confidence in the Summary of Economic Projections dropped to multi-year lows.

Political bruises followed in 2025, when the Department of Justice opened and then dropped a probe of Powell that briefly froze Warsh’s confirmation calendar.

What is in the Bag for Trump’s Fed Chair Pick Kevin Warsh?