Justice Department withdraws the case, Walsh enters, next week’s FOMC—the countdown to a Fed leadership change, the era of “no forward guidance” is coming.

Next Wednesday, Powell will take the stage at the press conference and announce the end of this meeting with a decision that holds no suspense—no change in interest rates.

The market is not really waiting for this decision.

On Friday, the U.S. Department of Justice dropped its criminal investigation against Powell. The biggest political obstacle that has been used to block Trump’s nominee—Kevin Warsh—was thus removed. Data from prediction market Kalshi that day: The probability that Warsh will be officially confirmed before May 15, when Powell’s term ends, jumped from 30% to 84%.

In other words, the April 29 press conference is very likely the last time Powell stands on stage as Fed Chair.

Warsh wants to dismantle the foundation

On April 21, Warsh sat before the Senate Banking Committee and said: “Too many Fed officials, current and former, express opinions in advance, stating where they think rates should be at the next meeting, next quarter, and next year.”

The range of this statement goes far beyond any decision to raise or cut rates.

At the same hearing, he explicitly called for the abolition of the “dot plot”—the chart published quarterly showing the rate forecasts of 19 FOMC members. He criticized core PCE as “a rough estimate.” He said inflation “is a choice,” and characterized the high inflation of 2021–22 as a policy mistake, not the result of external shocks. As for the regular press conferences after every FOMC, he refused to commit to continuing them: “Seeking truth is more important than repetition.”

He also hinted at possibly reducing the number of meetings per year, but gave no specific number.

Forward guidance—the mechanism by which the Fed tells the market what it plans to do in advance—was set up by Bernanke after 2008. From calendar-based commitments to conditional commitments, then to press conferences after each FOMC, dot plots, and statements analyzed word by word, this framework has quietly become the invisible foundation for global asset pricing over the past 15 years.

Warsh said he wants to dismantle this foundation.

Powell is already fading out

Anyone who has read the records of this year’s January and March FOMC press conferences should have seen something.

On January 28, Powell said: “The Committee is not attempting to articulate when it will cut rates or by what criteria.” Compared to his habitual forward guidance statements of recent years, this was clearly a softer tone. On March 18, he went further—when asked if forward guidance might change, he unusually said publicly: “There is currently no consensus within the Committee on how to change the communication approach.”

This is a sitting chair saying: we have discussed this internally.

Simply put, Powell is actively loosening the constraints of forward guidance before stepping down. Not entirely forced by Warsh’s agenda; it seems more like he is deliberately making space for his successor. Two directions oddly converge: one gradually fading out in the last few press conferences of the predecessor, the other already announcing what to do upon takeover in the hearing.

The unanchoring does not begin on the day Warsh takes office.

This is not just a story about the bond market

The assumption “the Fed will tell you in advance what it plans to do,” over the past 15 years, has been deeply embedded in almost every asset pricing model.

The stock market feels it first at the valuation level. High PE growth stocks can maintain their multiples partly because the future path of discount rates is predictable—when you know where rates are and where they are headed, the cash flow discount model can produce credible numbers. Once Warsh’s framework is implemented, this premise disappears. When models start shaking, growth stocks’ valuations are much more fragile than value stocks. This is not a directional rate shock, but a loss of visibility in discount rates, which is more persistently destructive to value. The watershed depends on whether Warsh provides a substitute framework: if he introduces some form of “data-driven scenario guidance,” the compression of growth stock valuations will be much less than if he chooses total silence.

Credit market fragility is more hidden. Corporate debt refinancing decisions depend on “having a basic grasp of interest rate paths for the next three years.” When this visibility disappears, credit spreads must compensate for extra uncertainty premiums—current spreads are at their tightest in 25 years, with almost no buffer. From here, spreads will widen, and not slowly. The only invalidation is if Warsh’s “no forward guidance” is interpreted by the Senate and market as just a tweak in communication style, not a systemic shift.

The situation for exchange rates is even more hidden. Many emerging market central banks have treated Fed forward guidance as a policy reference over the past decade—if this reference suddenly becomes unreadable, it becomes harder to calibrate the local exchange rate policy, and currency volatility rises naturally. In the 2013 “taper tantrum,” weaker reserve EM currencies dropped 6%–15% in a few months. Current EM FX reserves have improved, but global growth prospects are weaker (IMF just cut 2026 global growth to 3.1%), so this time the growth premium is thinner.

Currently the MOVE index is about 67, below the historical average of 75–80. Implied bond market volatility is at a historically low level, and the market is still enjoying the certainty premium provided by forward guidance for free.

During the “Taper Tantrum” year, MOVE peaked over 125. That time, the market was panicking over “QE reduction”—direction known, only size uncertain. This time it’s about “the communication framework itself disappearing,” so the source of uncertainty is more fundamental. MOVE moving toward 75–80 is the signal for the bond market to act first; once it breaches 90, historical data shows stock and credit market volatility follows.

How to interpret the press conference day

If Warsh is confirmed by the Senate before May 15—current probability 84%—then April 29 is Powell’s last press conference as Chair. From now to May 15 is less than three weeks; if confirmation goes smoothly, the handover will be clean: Powell steps down, Warsh takes over, no overlap.

But in these three weeks, the market will not quietly wait. Warsh’s statements at the hearing are already clear enough; the market will reinterpret every word Powell says at the press conference in light of Warsh’s agenda—not because both are in office at the same time, but because the market is already pricing in the new framework.

He won’t comment on Warsh, won’t defend forward guidance explicitly, nor endorse his successor in advance. He’ll stick to saying “we make decisions meeting by meeting,” emphasize “data dependence,” and take the least controversial path on the rate decision.

As the press conference begins, Treasury futures react first—the market watches whether his wording on inflation is hawkish or dovish, which determines the initial policy conditions for Warsh’s tenure. In Q&A, reporters will almost certainly ask “how do you view forward guidance reform,” and that answer is worth reading word for word.

The more Powell emphasizes the value of forward guidance at the press conference, the more the market will expect Warsh to push harder to dismantle it.

The surprise to this press conference lies in what is not said.

The key things to watch next

The Senate voting timeline is the first watershed. The DOJ dropping the case removed Senator Tillis’ biggest obstacle, but his public statement after the case remains a gap in information. If the Banking Committee clears the way in the first week of May, the full Senate vote is expected in the week of May 11–14—if completed in this window, Warsh takes office the day Powell steps down, May 15; if delayed, Powell will chair one more press conference as acting chair, scheduled for June 16–17. The two outcomes yield very different market logic: the former concentrates the “no forward guidance” pricing expectations in the second week of May; the latter spreads the pressure out, giving the market more breathing space.

Warsh’s first public statement after confirmation is more important than the confirmation itself. Once the handover is complete, the nature of uncertainty changes—from “who’s at the helm” to “will he really do what he said at the hearing.” Historically, no major central bank has ever fully abolished forward guidance without a replacement plan. When the Reserve Bank of Australia abandoned yield curve control in 2021, they set up a transition period. If Warsh announces some “data-driven scenario guidance” upon taking office, market turbulence will be significantly limited; if he truly chooses total silence, that marks the formal start of the “no signal era.”

The MOVE index is the most direct observation window. Moving from 67 toward 75–80, the bond market reacts first; breaching 90, stock and credit market volatility follows. The magnitude of data shocks between each FOMC is also worth watching.

The follow-up actions of global central banks are not tail risks but variables that must be calibrated in advance. The ECB and BOJ have treated the Fed’s policy path as a key external reference over the past decade. If this reference becomes unreadable, divergences in country monetary policy will expand, and cross-market transmission logic will be more complex—rising FX volatility is the most underestimated transmission path in this chain.

The June 16–17 FOMC is the ultimate verification node. That will likely be Warsh’s first meeting as chair—first statement without a dot plot, first press conference that might change format or frequency. All judgments about ‘systemic reform’ must be reconciled there.

The mainstream market expectation now is to treat all this as personnel news—wait until Warsh actually takes office. But unanchoring is a process, not a moment. And this process begins next Wednesday.

Risk warning and disclaimerThe market has risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their particular circumstances. Investment based on this, responsibility lies with the investor.