Remaining as Governor + Interim Chair? Powell Reveals for the First Time He's Not in a Hurry to Leave the Fed—What Does This Mean?

Federal Reserve Chair Jerome Powell publicly stated on Wednesday for the first time that he will not leave the Fed until the criminal investigation by the U.S. Department of Justice is concluded. This is Powell’s first public discussion of his resignation plans.

Powell’s stance has significant implications for President Trump’s efforts to reshape the Federal Reserve. If Powell remains on the Federal Reserve Board, Trump will lose a board seat that could have been filled by a nominee he appointed. Currently, three of the seven Fed governors are appointed by Trump.

Powell also indicated that even if his term expires, he may continue to serve as interim chair until his nominated successor—Kevin Wirth—is confirmed by the Senate. Previously, Wirth’s confirmation process has been stalled due to a senior Republican senator’s vow to block the nomination as long as the DOJ’s investigation into Powell remains ongoing, with less than two months left in Powell’s term.

Powell’s firm stance could create a rift between him and Senator Jenean Pirro. Pirro, a former Fox News host appointed by Trump as U.S. Attorney for D.C., has vowed to push forward with the investigation into Powell. While Trump wants the Fed to bow to his wishes, he faces obstacles, including Pirro’s investigation.

“In the meantime, I have no intention of leaving the Board until the investigation is thoroughly and transparently concluded,” Powell said at a press conference after the Fed’s decision, referring to his seat on the Board.

Additionally, Powell hinted that he might stay on even after Pirro’s investigation ends. “I have not made that decision yet. I will decide based on what I believe is best for the institution and the people we serve,” Powell stated.

Although Powell’s chairmanship will end in mid-May, his term as a Fed governor will continue until January 31, 2028.

Historically, Fed chairs rarely remain in their roles after their terms end. The last to do so was former Chair Marriner Eccles, who stayed on at President Truman’s request in 1948.

Interim Chair

Powell said that continuing to serve as interim chair during the leadership vacuum caused by delays in Wirth’s confirmation is “a matter of law.”

“If my successor has not been confirmed before my term ends, I will serve as interim chair,” Powell said.

“We have done this before, including in my own case (after my first term), and we will do so again,” he added, referencing the Senate’s delay in confirming his reappointment in 2022.

Senate Banking Committee Republican Tom Tillis has said he will not allow Wirth’s confirmation to proceed until the investigation into Powell concludes. Last week, a U.S. judge dismissed a subpoena from Pirro to Powell and the Fed, which could have advanced the nomination process, but Pirro announced she would appeal the ruling, likely causing further delays.

Since 1978, there have been three instances where the Senate had not confirmed a new chair when the current chair’s term expired, with the sitting chair serving as acting chair, known as “interim chair.” Two of these cases—1996 and 2022—occurred while the chair was awaiting confirmation for a second term. In 1978, the White House asked the outgoing chair to stay on until their successor was sworn in.

Fed Power Struggles

As Powell made these remarks, relations between Trump and the Fed were at a rare point of conflict. Since returning to the White House over a year ago, Trump has repeatedly criticized the Fed for not cutting interest rates sharply as he wished and has threatened to fire Powell multiple times.

Trump also attempted to dismiss Fed Governor Lisa Cook, a case now before the Supreme Court.

In response to the DOJ’s investigation into his legal issues related to the Washington headquarters renovation overruns, Powell strongly countered, saying the investigation is essentially punishing the Fed for not complying with Trump’s monetary policy demands.

A judge agreed. Chief Judge James Boasberg of the U.S. District Court in D.C. wrote, “The (Trump) administration has provided no evidence that Powell committed any crime other than ‘offending the President.’ They might as well investigate him for mail fraud, given that someone saw him send a letter.”

Because the Fed chair also serves as a board member, with different terms for each position, succession issues are complex. Further complicating matters, FOMC members are responsible for electing the Chair of the FOMC, although this position has traditionally been held by the Fed Chair.

The legal challenges against the Fed by the Trump administration are widely seen as exerting pressure on the central bank’s independence. Congress grants the Fed independence in setting interest rates.

Many Fed officials and private sector economists believe that monetary policy free from political interference yields better economic outcomes. Fed leaders who are directly subordinate to the government often perform poorly in controlling inflation—this was noted by New York Fed President Williams in early January.

(Article source: Caixin)