Powell's Next Move in Focus as Fed Chair Term Nears End: Will He Stay or Go?

Powell’s Chair Term Ends in May... Board Tenure Extends to 2028
New Chair Nominee Warsh Signals "Regime Change"
Experts Expect Powell to Stay for Now... "Stabilizing Force During the Transition"

With the term of Jerome Powell, Chair of the U.S. Federal Reserve (Fed), set to end on May 15, attention is focused on his next steps. Although his term as chair will expire, he still has two years remaining in his term as a board member, raising questions about whether he will remain on the board.

According to Bloomberg News and Yahoo Finance on April 28 (local time), Chair Powell is scheduled to release a statement and hold a press conference after the conclusion of the Federal Open Market Committee (FOMC) meeting on April 29. As this press conference could potentially be Powell's last, there is speculation that he may offer hints about his future plans.

Jerome Powell, Chair of the U.S. Federal Reserve (Fed). Photo by Reuters Yonhap News

While U.S. President Donald Trump continues to pressure the Fed to cut interest rates, Kevin Warsh, a former Fed governor who has been nominated to succeed Powell, has pledged to pursue a "regime change" at the Fed. Analysts at Evercore ISI stated in a recent report that with respect to Warsh, "The key question is how quickly he can transform the Fed. This depends on the pace of replacing members of the Board of Governors and the FOMC, particularly whether or not Chair Powell resigns."

In a press conference last month, Powell said, "I have no intention to resign as Fed Chair until the investigation is completed transparently and conclusively." He also stated that he had not yet decided whether to remain as a board member if a new chair is appointed and the investigation is concluded.

The U.S. Department of Justice has announced the closure of its investigation into alleged excessive renovation expenses at the Fed headquarters that targeted Powell. This has cleared the way for Warsh's confirmation in the Senate. Some Republican senators, including Tom Tillis of North Carolina, a member of the Senate Banking Committee, had previously blocked Warsh’s confirmation, arguing that the Justice Department's investigation into Powell was politically motivated, but on April 26, they withdrew their opposition. However, President Trump, who has had conflicts with Powell over his calls for rate cuts, recently warned that he would "fire" Powell if he does not step down from the board after his term as chair ends.

By convention, Fed chairs typically leave the board when their term as chair ends, even if they have time left as a governor.

However, amid concerns over the Trump administration's pressure to lower rates and possible encroachment on the Fed’s independence, speculation has emerged that Powell might remain on the board after his term as chair ends. There is precedent: former Chair Marriner Eccles continued serving as a board member from 1948 to 1951 after his term as chair, during a period of conflict between the Fed and the U.S. Treasury over interest rate policy. Gregory Daco, Chief Economist at EY, said in a note to clients the previous day that he expects Powell to remain on the board not for political reasons, but to maintain institutional continuity.

Daco added that under Warsh, the Fed could become more centralized, less transparent, and more vulnerable to political influence, stating, "In that context, if Powell remains on the board, he could preserve institutional continuity, maintain established communication practices, and serve as a stabilizing force during the transition." During his confirmation hearing on April 21, Warsh asserted the need for a regime change in Fed policy management and called for a "new inflation framework." He also made negative remarks about Fed officials commenting on monetary policy and declined to answer whether he would continue the practice of holding press conferences after FOMC meetings.

Jaret Seiberg, an analyst at TD Cowen, predicted that Powell would remain at the Fed until both the inspector general and Justice Department investigations are fully closed, adding, "I think that process will take several months."

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