Divisions awaiting Warsh to be on display in Fed minutes release

By Dan Burns

Wed, May 20, 2026 at 6:10 AM EDT 4 min read

By Dan Burns

WASHINGTON, May 20 (Reuters) - The depth of the differences among Federal Reserve policymakers' views on the direction of interest rates and severity of inflation will be on view on Wednesday with the release of a readout of the most divided meeting in a generation, one that also marked the ‌end of Chair Jerome Powell's leadership tenure.

With Powell's successor Kevin Warsh set to be sworn in on Friday, Wednesday's release of the minutes of the April 28-29 meeting ‌will add critical detail about shifts in two blocs of Fed officials waiting to greet him - a growing one wary of the inflation arising from the war in Iran and of any talk of future rate cuts, and ​a diminishing one still leaning toward lowering borrowing costs.

Warsh, who says he relishes a "good family fight" and has himself laid out arguments in favor of lower interest rates, will become Fed chair at a White House ceremony hosted by President Donald Trump, who appointed him and who has been explicit in his demands for deep rate cuts. The minutes could show just how hard it will be to prevail in an argument for easier policy, though Trump himself has recently downplayed those expectations.

The Federal Open Market Committee, the Fed's rate-setting body, left its short-term policy rate unchanged in ‌a range of 3.50% to 3.75% last month, but four policymakers ⁠dissented, the most since 1992.

Moreover, the dissents were mixed. One official - Governor Stephen Miran, another Trump appointee who will leave the Fed on Friday to vacate a seat for Warsh - dissented in favor, again, of a rate cut. Three others, meanwhile, dissented over the continued use of language ⁠in the accompanying policy statement that suggests the Fed still may cut rates.

Those three - and others in the weeks since the meeting - point to inflation that is running well above the Fed's 2% target and likely to move further away from it in the near term thanks to widening price pressures aggravated by the U.S-Israeli-led war on Iran. The conflict has sent oil prices up by more than 50%, ​and ​the latest consumer and wholesale inflation data show price pressures have begun widening beyond the energy sector.

They ​also note a steady jobless rate and two months of stronger-than-expected job ‌creation indicate the employment market remains resilient and is not in need of lower interest rates to prop it up.

A key focus in Wednesday's readout will be a section used to describe the FOMC debate about the outlook for monetary policy. The minutes of the March meeting, for instance, showed an increase from the prior meeting in January in the number of policymakers who felt there was a case for a "two-sided description of the Committee’s future interest rate decisions in the postmeeting statement". That indicated that more among them felt a rate hike could be appropriate if inflation were to remain above target.