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U.S. Attorney for the District of Columbia Jeanine Pirro said in a social media post Friday morning that the Justice Department is closing its investigation into Federal Reserve Chair Jerome Powell, clearing a path for Kevin Warsh to be confirmed as Powell's replacement.

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.

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.

Former Federal Reserve Vice Chair for Supervision Randal Quarles, who served during President Trump's first term, said members of the Fed board should be removable by the president, but that the decentralized structure of the Fed will ensure that monetary policy decisions remain sound.

Federal Reserve Gov. Stephen Miran said it is too early to judge how U.S. involvement in the war with Iran will affect inflation and monetary policy.

"A slightly less hawkish decision than had been anticipated," said Art Hogan, B. Riley Wealth chief market strategist.

With no rate change expected, analysts are watching the new Summary of Economic Projections and the statement for insight into the panel's thinking.

A federal judge wrote in an opinion that a "mountain of evidence" suggests the subpoenas were an effort to push Federal Reserve Chair Jerome Powell to lower interest rates or resign.

Federal Reserve Gov. Lisa Cook said AI could boost productivity, but warned the transition may raise unemployment and force difficult tradeoffs between inflation and jobs.

Federal Reserve Bank of Chicago President Austan Goolsbee said the central bank should focus on getting inflation to its 2% target before making any additional cuts to short-term interest rates.

Federal Reserve Gov. Christopher Waller said during an appearance Monday his decision on whether or not to support a cut to short-term interest rates depends on labor market indicators.

The Bond Buyer's 2026 Predictions Report shows professionals expect growth for the year ahead, but are cautious about changes coming to the central bank.

"Unsurprisingly, the market is taking these numbers in stride, with the bond market only slightly higher after a large rally over the last couple of days due to the equity market sell-off," said John Kerschner, global head of securitized products and portfolio manager at Janus Henderson Investors.

Muni SMAs now hold an estimated $1.3 trillion in assets under management across around 180 managers, per J.P. Morgan. Meanwhile, ETF muni holdings are at $163.1 billion, up 22.4% year-over-year, as of the third quarter of 2025, according to the latest Federal Reserve data.

"The bond market marked down the odds of rate cuts after the release," said FHN Financial Chief Economist Chris Low. "The fact long yields are still lower than two days ago suggests traders are skeptical of the quality of the employment data but are confident the Fed will use it as a reason to keep rates steady," he said.

"Markets are reading this as a strategic pause, not a policy shift," said Gina Bolvin, president of Bolvin Wealth Management Group.

Analysts don't expect a rate cut at this meeting, but offer thoughts on the year ahead and the to-be-named Fed chair.

Munis were steady Monday following the large cuts the asset class saw last week, specifically on Tuesday, Jan. 20.

Observers said the Supreme Court likely will allow Federal Reserve Gov. Lisa Cook to remain at her post while she challenges her purported removal by President Donald Trump. But her continued presence would slow, rather than stop, the president's quest for a voting majority on the central bank board.

Federal Reserve Vice Chair for Supervision Michelle Bowman warned that labor market conditions could weaken further and said the central bank should avoid signaling a pause in monetary policy.

A handful of former Fed officials noted that the markets' measured response to a probe into Fed Chair Jerome Powell was a result of pushback from Trump allies.

Federal Reserve Gov. Stephen Miran said he doesn't "really buy" the view that a potential indictment of Fed Chair Jerome Powell would affect the central bank's monetary policy.

Panelists diverged sharply on the outlook for 2026 at the Executives' Club of Chicago's Annual Economic Outlook panel, held at a hotel in Chicago's Loop.

"The bond market breathed a sigh of relief this morning as the CPI inflation numbers came in a tad weaker than expected," said John Kerschner, global head of securitised products and portfolio manager at Janus Henderson Investors.

Federal Reserve Chair Jerome Powell said the central bank has been served grand jury subpoenas and been threatened with criminal indictment, moves he called "pretexts" to influence interest rates through "political pressure or intimidation."

"With decent job growth in December and a downtick in the federal funds rate, the Federal Reserve will likely hold the federal funds rate steady at [its] next decision in late January," said Comerica Bank Chief Economist Bill Adams.

Federal Reserve Bank of Richmond President Tom Barkin said economic uncertainty should ease in the coming year as businesses gain confidence in sustained demand and adapt to the new policy environment.

Minneapolis Federal Reserve President Neel Kashkari said on CNBC that both sides of the central bank's dual mandate show signs of imbalance, with the labor market appearing more vulnerable.

The Federal Open Market Committee meeting minutes showed the decision was closer than the vote indicated, with "a few" voters suggesting they would have supported no change at the meeting.

With Federal Reserve Chair Jerome Powell's term expiring, there is added uncertainty about monetary policy.

Muni yields were bumped a basis point, while UST yields fell two to four basis points.

Federal Reserve Gov. Christopher Waller said monetary policy must remain insulated from political pressure, arguing that communication with the White House should be limited. Waller is slated to meet with President Trump Wednesday afternoon.

Inflation reports may drive markets in 2026 since the labor market is "sending mixed messages," said Kevin O'Neil, associate portfolio manager and senior research analyst at Brandywine Global.