Federal Reserve Chair Jerome H. Powell announced on Wednesday that he will continue serving as a governor on the central bank's board after his term as chair ends on May 15, breaking a long-standing tradition. The decision comes amid mounting legal and political pressures, including a criminal investigation tied to the headquarters renovation project that Powell said forced him to stay.
Speaking at a press conference following the Fed's decision to hold interest rates steady at 3.5%-3.75%, Powell stated: “After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined.” He emphasized that his decision was driven by ongoing legal concerns, saying: “I’ve said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that.”
Although the Justice Department recently indicated it would drop its probe into the renovation project, U.S. Attorney Jeanine Pirro warned that the matter would stay under review by the Fed's inspector general and could be reopened if new facts emerge. Powell acknowledged the lingering threat, telling reporters he had “no choice” but to stay, even though he had wanted to leave. He also indicated he would maintain a “low profile” as a governor.
The last time a Fed chair remained on the board after their term ended was in 1948, when Marriner Eccles continued as a governor for three years. Powell’s move underscores growing tensions with the administration of President Donald Trump, who has repeatedly pushed for lower borrowing costs and criticized the central bank’s independence. Attempts to remove Governor Lisa D. Cook over alleged misconduct have further heightened fears about political interference.
Powell expressed concern that the attacks are battering the institution: “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.” If Powell stays beyond May 15, it could complicate the administration’s plans for appointing a successor and maintaining influence over monetary policy.
The Fed’s rate hold came as expected, but three dissenting governors called for tighter guidance, which weighed on risk assets. Bitcoin slipped under the $75,000 support mark, with 21shares macro analyst Matt Mena noting: “The Fed’s decision to keep rates steady wasn't the shocker, but those three dissenters calling for a strike on any easing guidance threw a bucket of ice on the market’s pivot party.” Focus has shifted to potential policy changes ahead, including the possibility of a Kevin Warsh pivot favoring rate cuts and the imminent passage of the CLARITY Act.
