Federal Reserve Chair Jerome H. Powell said Wednesday he would stay on the board of the central bank, denying President Donald Trump the opportunity to fill another seat on the seven-member board.
Powell’s term as chair expires on May 15, and he said he would step aside for Trump’s pick, Kevin Warsh, to lead the board, once Warsh is confirmed. But his seat as a governor on the Federal Reserve Board doesn’t expire until early 2028.
“I plan to keep a low profile as a governor,” Powell said from the podium after the Fed announced it would leave rates unchanged. “There is only ever one chair of the Federal Reserve Board.”
Powell said his decision to stay was directly related to the Justice Department investigation into the Federal Reserve, even though the U.S. attorney’s office agreed to drop the probe.
“I’m literally staying because of the actions that have been taken,” Powell said. “I had long planned to be retiring.”
The two-day policy meeting, which ended Wednesday, is the last Powell presided over as chair of the central bank he has led for eight years.
The Federal Reserve Board also agreed to hold interest rates steady but the decision was not unanimous. Four officials dissented, the most since October 1992. Three of those officials favored the pause but objected to language in a closely watched Fed statement that suggests a bias toward eventually resuming rate cuts.
The Fed has been navigating a difficult backdrop: The war in Iran has shut the Strait of Hormuz, driving up energy prices and threatening to reignite inflation as broader economic uncertainty clouds the outlook for growth and employment.
“The economic outlook remains highly uncertain, and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation,” Powell said during a news conference. “Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself.”
Rising energy prices threaten to push inflation higher, while the broader economic fallout from the conflict in Iran could slow growth and put Americans out of work — leaving the Fed caught between its two core responsibilities and with little choice but to wait. The central bank’s short-term benchmark rate is important because it influences what millions of households and businesses pay to borrow, including for mortgages, credit cards and other loans.
Three presidents of regional Fed banks — Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas — backed the rate decision but objected to retaining language they described as an “easing bias” that signaled a future rate cut is more likely than a hike. A fourth official, Fed governor Stephen Miran, dissented in favor of a rate cut.
Powell, who was first elevated to the Fed’s top job by Trump in 2017, survived an extraordinarily aggressive campaign by the White House to push him out — including public demands for steep rate cuts, threats to try to fire him and a Justice Department criminal investigation into brief congressional testimony he gave last summer connected to a $2.5 billion renovation of the Fed’s Washington headquarters. A federal judge quashed subpoenas tied to that investigation earlier this year, ruling that the inquiry lacked merit.
Jeanine Pirro, the top federal prosecutor in Washington, said last week she would drop the investigation into Powell. That move allowed Sen. Thom Tillis (R-North Carolina) to drop a block over Kevin Warsh, Trump’s pick to succeed Powell, whose nomination had stalled for months.
The Justice Department has said it will appeal the ruling that threw out its subpoenas, though Tillis said Sunday on NBC’s “Meet the Press” that he had been assured the appeal was meant only to challenge the legal principle behind the ruling — not to revive the investigation itself. Tillis said Powell could remain on the board after May 15, saying he suspected Powell wanted to see the appeal fully settled first. Powell last month said he has no intention of leaving the Fed’s board of governors until the Justice Department investigation is “well and truly over.”
Earlier Wednesday, a Senate panel approved Warsh’s nomination in a 13-11, party-line vote. The move all but guarantees his confirmation by the GOP-led Senate after the chamber returns from next week’s recess.
Powell’s tenure is likely to be remembered for beating back the worst inflation spike in four decades — a surge that neared double digits in 2022 — while steering the economy through that fight without triggering the deep recession many had feared.
Even with inflation now far below its peak, it has remained stubbornly elevated for five consecutive years, running closer to 3 percent — about a percentage point above the Fed’s preferred target. Warsh, once confirmed in the coming weeks, will inherit the long-running challenge of guiding it the rest of the way home.
Warsh has signaled he intends to scale back some of the communications practices Powell put in place, including potentially holding fewer news conferences and pulling back on forward guidance that he has argued can leave policymakers anchored to outdated forecasts.
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