Federal Reserve Chair Jerome Powell announced Wednesday he will remain at the Fed as a governor after his term as chair ends next month, saying he felt he had no choice but to stay amid a series of legal attacks that are “battering” the central bank.
"These legal actions by the administration are unprecedented in our 113-year history,” Powell said. “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."
He said he will stay “for a period of time to be determined.”
Powell, whose term as chair ends May 15, offered no additional timeframe for his plans, saying only he will leave “when I think it is appropriate to do so.”
The move — which could allow Powell to continue shaping US monetary policy with voting powers until 2028 — immediately became a new flash point with President Trump and his team.
Trump responded with another insulting Truth Social post where he said Powell was staying on “because he can’t get a job anywhere else.” Treasury Secretary Scott Bessent added in an appearance on Fox Business that it was “a violation of all Federal Reserve norms.”
The seven members of the Board of Governors of the Federal Reserve System are confirmed to staggered 14-year terms, while chairs serve for four years at a time.
Powell has led the central bank for eight years, serving two terms as chair. He was first nominated by Trump in 2018 and reappointed by former President Joe Biden.
Warsh, his likely successor, was confirmed earlier Wednesday by the Senate banking committee, advancing his nomination to a full Senate vote. But Warsh is not set to take Powell’s position as governor; instead, he is set to fill the seat currently held by Trump ally Stephen Miran.
Read more: How much control does the president have over the Fed and interest rates?
"I plan to keep a low profile as a governor," Powell promised Wednesday as he praised Warsh. "There's only ever one chair of the Federal Reserve Board."
Trump was asked on Wednesday, before Powell’s announcement, whether Warsh would be able to convince the members of the committee, which held rates steady Wednesday with three dissenting votes over the “easing bias” in the policy statement.
“We’ll see,” Trump said, “but they should.”
A break from recent precedent
Powell’s decision marks a break from recent history. His immediate predecessors have all left the central bank entirely when their time as the top monetary policy official ended.
Janet Yellen, Ben Bernanke, and Paul Volcker all resigned their positions as governor the same day that their terms as chairs ended.
Alan Greenspan’s term as a governor expired in 2006 at the same time as his term as chairman ended, according to Federal Reserve records.
There is some precedent further back for Powell’s move.
Arthur Burns stayed on the board for just two months after his term as chair ended in the 1970s. Marriner Eccles stayed on as a governor for three years after his term as chair ended in 1948.
Powell’s decision could set up renewed tensions with Trump, who has attacked Powell in starkly personal terms for years, and now appears to be temporarily denied the opportunity to fill Powell’s seat with an ally.
“I’ll have to fire him,” Trump told Fox Business this month when he was presented with the scenario of Powell “not leaving.”
Press secretary Karoline Leavitt offered a slightly more conciliatory message earlier this week when she said she hadn’t talked to the president specifically about firing Powell if he stayed on as governor.
“I think the president will be satisfied once Kevin Warsh is confirmed as the Fed chair,” Leavitt said.
A question of prosecution ‘finality’
The core issue for Powell is a criminal investigation into his testimony about renovations at the Federal Reserve’s headquarters.
In March, he told reporters he hadn’t made a decision about staying on but made clear the status of the investigation was a key factor.
“I have no intention of leaving the Board until the investigation is well and truly over, with transparency and finality,” Powell said. He repeated those words on Wednesday.
That finality question remains a matter of considerable debate, and Democrats have charged that last week’s drawdown from the Department of Justice is far from final.
US Attorney Jeanine Pirro announced last week her office would “close our investigation” and hand it over to an internal Fed probe, but she added, “I will not hesitate to restart a criminal investigation should the facts warrant doing so.”
Sen. Elizabeth Warren told Yahoo Finance on Tuesday that Trump is determined to continue wielding “the sword of criminal prosecution” over the Fed. On Wednesday, as Warsh’s nomination advanced on a party-line vote, she added that Trump continues to “keep the threats of bogus criminal charges alive.”
Yet it was enough for Sen. Thom Tillis, a key Republican holdout who was blocking Warsh’s nomination as long as the Powell investigation was unresolved. During Wednesday’s vote, Tillis again slammed the attempt to prosecute Powell, but said “it’s done” based on Department of Justice actions and “assurances that they gave me.”
Powell, for his part, said, “I am watching the remaining steps carefully.”
This story has been updated with additional developments.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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