Federal Reserve Chair Jerome Powell will gavel in his last Federal Open Market Committee meeting Wednesday, with the CME Group's FedWatch tool showing a 100 percent probability of a hold and Bridgewater Associates founder Ray Dalio warning Powell's likely successor, Kevin Warsh, not to ease into what he calls a stagflationary period. Hours earlier in Tokyo, the Bank of Japan kept its policy rate steady at 0.75 percent on a 6-3 split, lifting its core inflation forecast to 2.8 percent from 1.9 percent on Iran-war supply shocks.

The three central-bank set pieces leave the federal funds rate target on hold at 3.5 percent to 3.75 percent for a third straight meeting, the BOJ openly defending the yen near 159 to the dollar, and Warsh, expected to take the chair when Powell's term ends May 15, inheriting an inflation backdrop that even market-friendly investors are urging him not to cut into.

What Powell faces

The FOMC announces Wednesday at 2 p.m. ET, with Powell's press conference at 2:30. The Fed last cut in December 2025 and held at the January and March meetings, while the Consumer Price Index jumped to 3.3 percent in March on an annual basis, the highest since May 2024 and well above the 2 percent target. Moody's Analytics chief economist Mark Zandi told CBS News the committee is "stuck in place" and may not cut at all this year.

The Warsh question

The Senate Banking Committee is scheduled to vote on Warsh on Wednesday afternoon, after Sen. Thom Tillis, R-N.C., said Sunday he was prepared to move forward once the Justice Department closed its renovation probe of Powell. EY-Parthenon chief economist Gregory Daco said in an April 27 email he expects Warsh to be confirmed in time for the June FOMC.

Dalio, speaking Monday on CNBC's "Money Movers," said the U.S. has slipped into a stagflationary environment. "Certainly, you would not cut interest rates now," Dalio said. "You will lose your credibility. The Federal Reserve would lose its credibility, particularly now."

Tokyo's hawkish hold

The BOJ's three dissenters proposed a hike to 1 percent, citing Middle East tensions skewing prices to the upside. The bank cut its fiscal-2026 growth forecast to 0.5 percent from 1 percent. Masahiko Loo, senior fixed income strategist at State Street Investment Management, wrote that the decision "should be seen as much about currency defence as inflation control, signalling growing intolerance for further yen weakness as domestic inflation and growth prove resilient." The 10-year Japanese government bond yield, which touched 2.496 percent on April 13, the highest since 1997, sat at 2.468 percent after the decision.

Counterpoint

Fed funds futures price no cuts for the rest of 2026, but the dovish case is that a Warsh-led committee, installed against President Trump's pressure on Powell to lower rates, may set a different trajectory once inflation softens or the labor market cracks. Today's dossier draws on center and lean-left coverage; an explicitly conservative framing of the Trump-Powell-Warsh sequence is absent from the reporting collected for this edition.

The FOMC statement and the Banking Committee vote both land Wednesday afternoon in Washington, with Warsh's full-floor confirmation, on Daco's timetable, due before the June FOMC meeting.