Federal Reserve Chair Jerome Powell said Wednesday that he plans to remain on the board of the central bank as a governor for an indeterminate period of time once he steps down as leader on May 15. Powell cited concerns about the Trump administration’s legal attacks against the institution. Fed leaders have traditionally retired from the bank once their terms as chair ended; Powell’s tenure as a governor on the board runs until January 2028.
The Trump administration opened an investigation last fall into Powell’s management of a construction project at the Fed, and the move was widely seen as an unprecedented effort to pressure Powell into cutting interest rates, as President Trump has repeatedly demanded. That investigation was recently dropped by the Justice Department and transferred to an inspector general, but Powell said he remains concerned about the lingering threat of improper interference.
“I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors,” Powell told reporters at his last press conference as Fed chief. He said he would wait until the investigation into the renovations “is well and truly over with transparency and finality.”
Powell said he would maintain a “low profile” as a governor, and vowed to support the new chair, Kevin Warsh, once he takes over. Warsh cleared a key hurdle to becoming the next Fed chief on Wednesday, when the Banking Committee approved his nomination and sent it to the full Senate for confirmation.
Rates hold steady: At the conclusion of its two-day policy meeting, the Fed announced that it is holding its benchmark interest rate in a range between 3.5% and 3.75%, keeping rates unchanged for the third meeting in a row.
The Federal Open Market Committee said in a statement that the U.S. economy continues to expand “at a solid pace,” while inflation is “elevated.” Overall, “[d]evelopments in the Middle East are contributing to a high level of uncertainty about the economic outlook,” the FOMC said.
The vote was unusually divided, split 8-4, the most dissents since 1992, according to The Wall Street Journal. But 11 of the 12 committee members agreed that rates should remain where they are, with only recent Trump appointee Stephen Miran preferring a quarter-point cut. The other dissents were focused on the wording of the outlook, with three Fed presidents — Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas — backing the rate decision but objecting to the retention of the “easing bias” in the FOMC outlook. (The bias lies in the use of the word “additional” in the FOMC statement: “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”)
What the analysts are saying: The Fed’s decision to hold steady on interest rates was widely expected, but Powell’s statement that he plans to stay on for some time as a Fed governor after May 15 was not guaranteed. Some analysts think Powell’s announcement, combined with the elevated level of dissent in Wednesday’s decision, suggests that the potential for internal conflict at the Fed over policy is rising.
“Powell’s final meeting as chair likely foreshadows what will be a period of discontent among members of the Federal Open Market Committee over the direction of policy,” RSM Chief Economist Joseph Brusuelas said in a research note. “The debate is taking place amid a broadening and deepening supply shock through energy markets that carries significant risk of causing a persistent bout of inflation just as a new chair, who presumably has a bias toward rate cuts, is taking over.”
Bob Michele of JPMorgan Asset Management told Bloomberg that the dissent from the three Fed presidents was less a rebellion against Powell than a signal to Warsh, saying ‘We could be dissenting. Prepare for that.’”
Perhaps eying the potential for resistance to changes in policy under Warsh, Treasury Secretary Scott Bessent made it clear that he is not a fan of Powell’s decision to stay on. “It’s highly unusual for someone who says he’s an institutionalist and cares about norms at the Fed,” Bessent told Fox Business Wednesday. “This is a violation of all Federal Reserve norms.”
Trump also offered a critique, writing on his social media platform: “Jerome ‘Too Late’ Powell wants to stay at the Fed because he can’t get a job anywhere else — Nobody wants him.”