Fed Chair Jerome Powell Makes Unusual Move Before Leaving Post
Federal Reserve Chairman Jerome Powell may be stepping down from the central bank’s top post later this month, but he is not exiting the institution altogether—a decision that is already raising eyebrows among economic observers and Trump allies alike.
Although Powell’s term as chair ends on May 15, he has opted to remain on the Federal Reserve Board of Governors through 2028. The unusual move could limit the ability of Donald J. Trump to fully reshape the Federal Reserve in line with his pro-growth, lower-interest-rate economic agenda during his second term.
President Trump nominated Kevin Warsh in January to succeed Powell as chairman, and Warsh is widely expected to secure confirmation. However, Powell’s continued presence on the board could complicate any policy shifts—particularly as the administration pushes for more aggressive rate cuts to stimulate economic expansion.
Powell’s track record has already drawn scrutiny. While he approved rate cuts ahead of the 2024 election amid elevated inflation, he has since resisted further reductions, frustrating calls from the Trump administration and many conservatives who argue that monetary policy should better support American growth and competitiveness.
“The decision that Powell will make on whether to remain on the board will shape the early term of Kevin Warsh, who appears likely to receive confirmation as Powell’s successor,” Joe Brusuelas, principal and chief economist for RSM US, wrote in a note Wednesday, The Hill reported.
“Should Warsh arrive at the Fed and intend to cut rates, Powell would almost surely end up dissenting if he remains on the board,” he continued. “And that would in effect make Powell the shadow chair well into 2028.”
Powell has justified his decision to remain at the Fed by pointing to an ongoing investigation into his handling of a costly Federal Reserve building renovation project. He stated that he intends to stay in place until the matter is resolved “well and truly over with transparency and finality.”
That investigation may soon intensify. Jeanine Pirro signaled over the weekend that she is prepared to revisit a criminal probe into Powell, depending on the findings of an internal inspector general review.
“I want to see what’s there. If there’s something there, great. And if there isn’t, I’ll go home,” Pirro told CNN’s Jake Tapper on “State of the Union.”
The Justice Department initially launched its inquiry into Powell’s oversight of the renovation project in January. While Pirro previously paused the investigation, she has made clear that it could be revived if new evidence emerges. Her office is also preparing to challenge a federal judge’s decision to block subpoenas tied to the probe, emphasizing the broader importance of prosecutorial authority.
Meanwhile, debate continues on Capitol Hill over the implications of the investigation and the independence of the Federal Reserve. Thom Tillis, a Republican member of the Senate Banking Committee, had delayed a separate nomination vote for months due to concerns surrounding the probe.
“At the end of the day, no crime was committed, and the prosecutors I spoke with all agree,” Tillis said. “That’s what I was fighting against, not any single prosecution, but a process that would undermine the independence of the Fed.”
Despite those concerns, Tillis has indicated confidence that Warsh will maintain appropriate independence while still aligning more closely with the administration’s economic priorities.
“I think so,” he said when asked whether Warsh would remain independent from the Trump administration.
For his part, President Trump has not held back in criticizing Powell’s leadership. In a Truth Social post on April 29, he wrote: “Jerome ‘Too Late’ Powell wants to stay at the Fed because he can’t get a job anywhere else — Nobody wants him.”
As Powell prepares to step down as chairman but remain within the Federal Reserve system, the stage is set for a potentially contentious transition—one that could shape U.S. monetary policy, interest rates, and economic direction well into the latter half of the decade.