Federal Reserve Chair Jerome Powell stated on Wednesday that he will continue to serve and lead the central bank after his term as Chair of the Federal Reserve Board expires in mid-May, provided his successor has not been confirmed by the Senate. This outcome runs directly counter to the direction pushed by former President Donald Trump.
Over recent months, Trump exerted unusually intense pressure on Powell, publicly demanding significant interest rate cuts and at one point threatening to remove him from his position before his term ended. This pressure intensified after the U.S. Department of Justice initiated a criminal investigation concerning Powell's testimony to Congress last summer about a $2.5 billion office renovation project at the Fed.
However, this pressure appears to have backfired. Republican Senator Thom Tillis of North Carolina, a key member of the Senate Banking Committee, has refused to advance the nomination of Kevin Warsh to succeed Powell unless the Justice Department formally concludes its investigation into Powell. This obstruction has stalled the administration's original timeline and could potentially extend the tenure of the Fed Chair whom the White House has tried to force out for months.
Trump indicated in January that he would nominate former Fed Governor Warsh, but the Senate has not yet scheduled a confirmation hearing. Powell told reporters on Wednesday, "That's what the law says," adding that this situation has precedent, including when his first term as Chair expired during the Biden administration before the Senate completed his reconfirmation.
Powell also stated he does not intend to leave the Fed before the Justice Department investigation concludes. Even after stepping down as Chair, he could choose to remain on the Fed's Board of Governors until early 2028, thereby retaining a crucial vote on the seven-member board and preventing the White House from immediately filling the seat. "I have no intention of leaving the Board before the investigation is truly, thoroughly finished, with transparency and a final conclusion," Powell said.
The White House did not respond to requests for comment. Some analysts believe the path to resolving the impasse is straightforward, but the administration has not taken it. Investment manager Mark Spindel noted that the administration holds the key, stating, "Trump could end this in one second, Tillis would stand down, and Warsh would be confirmed quickly. This is entirely a problem the president can solve immediately."
Powell's remarks came one week after Chief Judge James Boasberg of the U.S. District Court in Washington quashed two subpoenas related to the investigation, ruling it lacked basis. U.S. Attorney Jeanine Pirro, a key Trump ally, stated the Justice Department would appeal the decision and downplayed concerns that the investigation might delay Warsh's confirmation.
The battle over Fed leadership extends beyond Powell. Trump also attempted to remove Fed Governor Lisa Cook, but the Supreme Court has indicated she would likely remain in her position during her legal challenge to the dismissal. This means the White House's efforts to reshape the seven-member Fed Board are stalled on two fronts.
According to two people familiar with internal discussions, Fed staff have recently grown concerned that the White House might initiate a new legal dispute: announcing in mid-May that another sitting Fed Governor, such as former White House economic adviser Stephen Milan, would serve as Acting Chair. These individuals requested anonymity due to the sensitivity of the discussions.
Commentators supportive of Trump cited a nearly 50-year-old legal opinion prepared for the Carter administration, which argued that the president has inherent authority to designate an acting Fed Chair when the position is vacant. However, there is a widespread view within the Fed that this legal interpretation is flawed. People familiar with the matter stated this view has never been tested in court, nor has any administration ever relied on it.
In his ruling quashing the Fed subpoenas, Judge Boasberg detailed a timeline, noting that the timing of Trump's public criticisms of Powell's interest rate policies closely aligned with his requests for the Justice Department to investigate a political opponent. The judge stated that Pirro "swiftly executed Trump's instructions" and launched the investigation last year, which had "virtually no evidence suggesting Powell committed a crime."
Multiple members of the Senate Banking Committee, including its chairman, have stated they do not believe Powell committed a crime. At a press conference last Friday, when asked if Trump had asked her to investigate the Fed Chair, Pirro did not explicitly deny it, only stating that some dates listed by Judge Boasberg were incorrect. She said, "If you bring me information where I can find a crime, I will take the case from the devil. It doesn't matter where the case comes from."
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