Monetary policy

Federal Reserve Gov. Michael Barr Thursday warned against efforts to shrink the central bank's balance sheet, saying that effort could undermine financial stability and disrupt money markets.

The Senate voted 54-45 to confirm Kevin Warsh to lead the central bank. Warsh will take the reins from Jerome Powell, who said he will remain on the Federal Reserve Board.

The Consumer Price Index for April showed consumer prices rising across all categories, including food and shelter costs, and up 3.8% year-over-year. Grocery prices rose 0.7% from the month prior.

Market watchers say that the economy as a whole is holding up under higher energy prices and do not expect a recession. Even so, observers are watching financial markets and consumer spending for signs that inflation expectations are taking hold.

Employers hired an additional 115,000 workers in April, while unemployment remained unchanged at 4.3%. Despite the positive headline figure, a spike in newly unemployed workers and a rising number of underemployed workers suggests instability under the surface.

Federal Reserve Gov. Michael Barr said Tuesday that the U.S. energy sector is more insulated from shocks than Europe's, particularly in natural gas prices. However, he warned that the war is pushing up gasoline prices, which could spill over into other parts of the economy.

Market watchers think Jerome Powell will maintain a low-key presence on the Fed board as he awaits the release of an inspector general report examining cost overruns at the central bank's headquarters.

Federal Reserve Chair Jerome Powell told reporters Wednesday that he would remain on the Fed board after his term as chair expires next month, resolving the last and most significant open question about his departure and the onset of Kevin Warsh's leadership at the central bank.

As Federal Reserve Chair Jerome Powell gives what is most likely his final press conference as chair Wednesday afternoon, the Federal Open Market Committee is widely expected to keep interest rates steady.

The Federal Open Market Committee's April meeting — likely Federal Reserve Chair Jerome Powell's last — is unanimously expected to keep interest rates steady, but questions about energy, inflation and the upcoming transition in leadership still loom.

Sen. Thom Tillis, R-N.C., said on Sunday that he no longer opposes Kevin Warsh's nomination to serve as chair of the Federal Reserve following the Justice Department's announced closure of its inquiry into current Fed Chair Jerome Powell.

Economists and policy analysts say a prolonged disruption in the Strait of Hormuz — and uncertainty about the duration of the conflict — could drive up inflation and further weaken consumer sentiment, which could weigh on bank earnings.

Federal Reserve Gov. Christopher Waller said certain corporate functions at the 12 regional banks, including information technology and human resources, could be consolidated under one structure to increase standardization and reduce costs.

Kevin Warsh, President Donald Trump's pick to lead the Federal Reserve, denied that he would act as Trump's "sock puppet" if he's confirmed and said the president has directed him to lower interest rates.

As the Senate Banking Committee is slated to consider the nomination of former Federal Reserve Gov. Kevin Warsh to lead the central bank, an ongoing investigation by the Justice Department into Fed chair Jerome Powell makes the nomination's passage out of committee uncertain.

Wells Fargo CEO Charlie Scharf said bankers and economists are broadly against lowering interest rates now, given uncertainty from the Iran war.

Federal Reserve Gov. Christopher Waller said Friday that the length of time the Strait of Hormuz remains blocked will be a key factor in the longer-term inflation outlook — and, by extension, the Federal Reserve's monetary policy path.

Federal Reserve Gov. Stephen Miran Thursday said that the Iran war and tariffs will not have long-term impacts on inflation, but did say he is reconsidering his rate cut outlook for the year.

President Donald Trump said he would fire Federal Reserve Chair Jerome Powell if he does not resign after his term as head of the central bank ends in May. Trump made a similar threat against Fed Gov. Lisa Cook before attempting to fire her last August.

Federal Reserve Gov. Michael Barr said in a speech Tuesday that rapidly changing trade policies and conflict in the Middle East are straining rural communities by raising business operating costs.