History’s lesson on changing of chair at the Fed
Feb. 13, 2026
By Mary Hightower
University of Arkansas System Division of Agriculture
Fast Facts
- Loy: Fed, financial markets ‘take a while to catch up’ when new Fed chairs appointed
- Speculators expect no change in rate in March
- Rate cuts or even status quo may ease cost of borrowing money for farmers
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LITTLE ROCK — A change in the leadership of the Federal Open Market Committee may open a year of uncertainty as the economy and the new chair feel each other out, said Ryan Loy, extension economist for the University of Arkansas System Division of Agriculture.
Last month, the White House announced the nomination of Kevin Warsh to serve as chairman of the Board of Governors of the Federal Reserve System. If confirmed by the Senate, he would succeed Jerome Powell, who has been chair since 2018 and whose term expires in May.
The Federal Reserve System, begun by Congress in 1913, has a complex mission. Among its most well-known activities is setting the interest rates used by banks, a job performed by its Federal Open Market Committee. The system is made up of 12 regional banks, with 24 regional branches, including one in Little Rock.
Historical pattern
In looking at data from the Federal Reserve Bank of St. Louis, Loy found a pattern.
“What was interesting is that the economy grows more slowly in the actual transition year after a new Fed chair,” Loy said.
“It’s almost as if the Fed and the financial markets take a while to catch up to what that new chair is trying to do,” he said. Or in more colorful terms, “it’s like a giant game of chicken.”
Interest rates change
In its Jan. 28 meeting, the Federal Open Market Committee decided to maintain the target range for the federal funds rate at 3.5 to 3.75 percent. In a statement, the committee said it “seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run” as “uncertainty about the economic outlook remains elevated.”
The Fed cut rates in September, October and December 2025, a pattern that echoed the committee’s cuts in September, November and December of 2024. The last time the Fed raised interest rates was in July 2023.
The next FOMC meeting is March 17-18, 2026, and its actions are subject to much speculation.
CME Group’s FedWatch Tool — which analyzes the probability of FOMC rate changes — set the probability on Thursday at 92.1 percent that the current target rate would remain in place through March, Loy said.
CME is “only penciling in one cut this year, but again, it’s too early to tell,” Loy said.
CME Group operates major financial exchanges, including the Chicago Mercantile Exchange and the Chicago Board of Trade.
On Thursday, the prediction market platform Polymarket listed a 93 percent probability that the Fed would keep the current rates at the March meeting.
Downstream effects
While the Fed’s interest rates don’t affect consumers directly, a cut or even the status quo might provide a little relief for farmers by easing the cost of borrowing money.
“However, that relief is being eaten away by input costs such as fuel and fertilizer, and you’re still most likely having to borrow more” to maintain a farm operation, Loy said.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit uaex.uada.edu. Follow us on Facebook and Instagram. To learn more about the Division of Agriculture, visit uada.edu. To learn more about ag and food research in Arkansas, visit the Arkansas Agricultural Experiment Station at aaes.uada.edu.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land-grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on three campuses.
Pursuant to 7 CFR § 15.3, the University of Arkansas System Division of Agriculture offers all its Extension and Research programs and services (including employment) without regard to race, color, sex, national origin, religion, age, disability, marital or veteran status, genetic information, sexual preference, pregnancy or any other legally protected status, and is an equal opportunity institution.
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Media Contact:
Tracy Courage
tcourage@uada.edu