Powell, who has held for the last eight years one of the most influential positions in global finance, will continue serving as a Federal Reserve governor after May 15, when he relinquishes the head position.
The decision is likely to irk President and spark backlash.Â
If Powell stepped aside entirely, it would have opened a seat for Trump to fill, giving him another opportunity to shape the Feds leadership. By staying on, Powell retains influence over U.S. monetary policy, potentially intensifying tensions with the president.
“I plan to keep a low profile as a governor. There is only ever one chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that chair,” Powell told reporters at a news conference at the Federal Reserve on Wednesday.
He added that his decision to remain at the Fed hinges on the outcome of a Department of Justice investigation.
“I will not leave the board until this investigation is fully resolved with transparency and finality,” Powell said. “Im encouraged by recent developments and I am watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.”
“There are widespread concerns that these things will continue to happen,” Powell added, referring to pressure from the Trump administration to assert its influence over the central bank.
What began as a disagreement over interest rates has escalated into a broader confrontation between Powell and Trump, marking one of the most fraught periods of his eight years as Fed chair.
Trump has intensified his pressure campaign in recent months, publicly criticizing the Feds benchmark interest rate decisions and, at times, resorting to personal attacks.
Powells tenure at the central bank dates back to 2017, when he was selected by Trump to succeed Janet Yellen. He was reappointed to a second four-year term by President in 2022, which expires on May 15. However, his underlying term as a Fed governor runs longer, allowing him to remain at the central bank until 2028.
In March, Powell told reporters he had not decided on his next steps and declined to say whether he would remain on the Feds board after his term as chair ends.
Powells decision could now carry major implications for markets and policy â and further inflame those tensions.
Attention is now turning to who will lead the Fed next. And at the same time, the Supreme Court is expected to weigh in on a case involving Fed Governor , which could test the limits of presidential power over the central bank.
The contentious confirmation process had been delayed by a Justice Department investigation into Powells congressional testimony related to renovations of the Fed’s headquarters in Washington, D.C., which some lawmakers said needed to be resolved before moving forward.
Sen. Thom Tillis, R-N.C., called the DOJ investigation “bogus” and vowed to block Warshs nomination until it was dropped â even if he didn’t object to the quality of Trump’s pick.
With the investigation now closed, a Senate panel is expected to take up Warshs nomination, putting the former Morgan Stanley banker on track for a full Senate vote.
Like Powell, Warsh is not an economist by training, instead bringing a background in law and finance. He previously served on the Feds Board of Governors, becoming the youngest member in its history at age 35.
His potential return comes at a critical moment for the central bank.
The question of leadership at the Fed comes as policymakers weigh persistent , the economic impact of the war in Iran and a fragile global outlook ahead of the U.S. midterm elections.
