Jerome Powell to Remain on Fed Board Amid Legal Battles and Leadership Transition

Federal Reserve Chair Jerome Powell announced on Wednesday that he plans to remain on the Federal Reserve’s board after his term as chair concludes next month, stating he will stay "for a period of time, to be determined."

Powell cited the "unprecedented" legal attacks by the Trump administration as a direct threat to the independence of the nation’s central bank. "I worry these attacks are battering this institution and putting at risk the things that really matter to the public," he said during a press conference following the Fed’s decision to keep its benchmark interest rate unchanged.

Powell’s decision marks the first time since 1948 that a Fed chair will remain on the board as a governor. His move denies President Donald Trump the opportunity to appoint a replacement to the central bank’s seven-member governing board. The Senate Banking Committee had previously approved Powell’s successor, Trump appointee Kevin Warsh, in a party-line vote.

Under current plans, Powell will continue serving as a Fed governor, with his term potentially extending until January 2028. Warsh, if confirmed by the full Senate, will assume the chair position and take the seat currently held by Stephen Miran, a former Trump appointee whose term expired in January.

Economists suggest Powell’s decision may delay Warsh’s ability to implement rate cuts. Trump has repeatedly demanded rate cuts, a stance Warsh supported last year. "It probably means it will take Warsh a little bit longer to build the consensus he is trying to build," said David Seif, chief economist for developed markets at Nomura, an investment bank.

Meanwhile, U.S. Attorney for the District of Columbia Jeanine Pirro announced on X (formerly Twitter) on Friday that her office was ending its investigation into the Fed’s extensive building renovations. Instead, the Fed’s inspector general will oversee the scrutiny. Pirro added that her office could reopen the investigation if "the facts warrant doing so." She had previously indicated plans to appeal a court ruling that dismissed subpoenas issued by her office.

Powell stated on Wednesday that the Justice Department had assured him the appeal would not lead to a reopening of the probe unless the Fed’s inspector general’s separate investigation uncovered evidence of criminal activity. However, Powell expressed dissatisfaction with the lack of closure. "I’m waiting for the investigation to be well and truly over with finality and transparency," he said. "I’m waiting for that and I will leave when I think it appropriate to do so."

The Fed’s Federal Open Market Committee (FOMC) left its benchmark interest rate unchanged for the third consecutive meeting on Wednesday. However, it signaled the possibility of future rate cuts in the coming months. The decision drew the highest number of dissents since October 1992, with three officials opposing the reference to potential future cuts and a fourth, Stephen Miran, dissenting in favor of an immediate rate cut.

The dissents highlight the growing divisions within the Fed’s 12-member rate-setting committee ahead of Powell’s term as chair ending on May 15. In its statement following the two-day meeting, the Fed noted that "developments in the Middle East are contributing to a high level of uncertainty about the economic outlook." It also acknowledged that "inflation is elevated," though it did not provide further details on the economic conditions or the timing of potential rate adjustments.