Federal Reserve Chair Jerome Powell is facing sharp criticism from President Trump and his inner circle after announcing he will remain on the central bank's board of governors beyond his chairmanship. Powell declared Wednesday that he intends to stay for an unspecified period after Kevin Warsh, Trump's nominee to succeed him, takes the helm, citing ongoing legal threats he believes the institution still confronts.
While Powell has promised to keep a low profile, the decision has ignited fury among Trump allies. Some economists warn it could set the stage for a divisive power struggle between the outgoing and incoming chairs on the board. Joe Brusuelas, chief economist at RSM US, noted in a Wednesday analysis that Powell's choice will heavily influence Warsh's early tenure. If Warsh moves to cut rates, Brusuelas predicted, Powell would likely dissent, effectively operating as a shadow chair well into 2028.
Powell's term as Fed chair expires May 15, but his separate term as a board governor runs until January 31, 2028. He said he will remain until the Justice Department's probe into his handling of the Fed's office renovations is fully resolved. The DOJ recently transferred its criminal investigation to the Fed's inspector general, with assurances it won't reopen the case without a criminal referral. Powell called that development encouraging but stressed he is watching the remaining steps closely. He acknowledged that without the investigation, he would have retired long ago.
The last Fed chair to stay on after their term ended was Marriner Eccles in 1948. Powell's move drew immediate scorn from Trump, who has long feuded with him over interest rates. In a Truth Social post, the president labeled Powell as 'Jerome 'Too Late' Powell' and claimed nobody wants to hire him. In the Oval Office Thursday, Trump appeared dismissive, saying he didn't care if Powell stays, but called him a negative force. He insisted his main goal was ensuring Warsh becomes chair.
Treasury Secretary Scott Bessent argued Wednesday that Powell's decision violates all Federal Reserve norms, calling it an insult to Warsh and other Republican board appointees like Michelle Bowman and Chris Waller. Bessent suggested Powell's move implies these nominees don't care about the institution's integrity. Meanwhile, Warsh's confirmation appears on track after the Senate Banking Committee advanced his nomination on a party-line vote Wednesday, following the DOJ's closure of its investigation. Powell congratulated his likely successor during his final press conference as chair, stating there is only ever one chair of the board.
Despite Powell's conciliatory tone, National Economic Council Director Kevin Hassett expressed disappointment Thursday, urging de-escalation. He noted the Justice Department has stood down, implying Powell should follow suit. Powell's decision also blocks Trump from appointing another Fed governor, limiting the administration's ability to shift the committee's direction. The standoff echoes broader tensions between the White House and the central bank, with implications for monetary policy and institutional independence.
