On his way to the office each day, Powell would pass by a portrait. It depicted his predecessor, Arthur Burns. No one knows how many times the Federal Reserve Chair said the same thing to that antique portrait in his mind— "I will not become you."
The name Burns stands as a cautionary symbol in Fed history: he allowed inflation to spiral out of control and ultimately crumbled under Nixon's pressure to cut rates. Half a century later, Powell faced a nearly unsolvable test. And he ultimately did not go down that path—this, perhaps, is the most profound legacy he leaves for the institution.
A power transition is now in its final countdown. On May 13, 2026, the U.S. Senate officially confirmed Kevin Warsh as the new Federal Reserve Chair with a vote of 54 in favor and 45 against. The timeline is clear: This Thursday (May 14), Warsh is expected to be sworn in; This Friday (May 15), Powell's term as Fed Chair officially concludes. But this curtain call is different—Powell is not leaving. The Fed Chair, a non-economist and former private equity partner, will remain on the Federal Reserve Board, becoming the first Fed Chair in 75 years to stay on after his term as chair ends. This decision itself is his final political legacy—and the most delicate symbol looming over his successor, Warsh.
"See You, Not Next Time" On April 29, 2026, as the Fed's regular press conference neared its end, Powell stepped away from the podium and said to the reporters present:
Thank you very much. See you, not next time.
It was the last time he stood in that position as Federal Reserve Chair. Over the past eight years, what he experienced transformed the role of Fed Chair into the most dangerous and complex position in central banking history: a once-in-a-century global pandemic, the most severe panic in four decades, an unprecedented political hunt, and a "soft landing" gamble that almost no one believed would succeed. Daleep Singh, former head of markets at the New York Fed, offered what he considers the most accurate assessment: "This may have been the most difficult period to serve as a central bank governor since the Fed's founding."
Spring 2020: "Crossing Lines" at the Cliff's Edge To understand Powell's eight years, one must start with March 2020. At that time, the COVID-19 pandemic swept across the globe at a visible pace, the U.S. Treasury market began to experience functional failure, and internal scenario analyses included a path toward a "Great Depression-like scenario with unemployment nearing 20% for a year." Powell told colleagues the feeling was like swimming behind a speedboat—struggling to catch up but still falling behind.
His response was forward-looking and decisive. The Fed slashed benchmark rates to zero in an extremely short timeframe, restarted and massively expanded quantitative easing, and unprecedentedly provided direct credit support to corporations and municipal entities, expanding the operational boundaries of this century-old institution. "We crossed a lot of red lines," Powell later admitted. "In that situation, you do it first and figure out how to deal with the aftermath later." This time, he bet right. The U.S. avoided a second Great Depression, and the job market largely recovered in about two years—compared to the six years it took after the 2008 financial crisis. Even Trump, who had publicly called him "ignorant" and a "dope," called to label him the "most improved player."
The Cost of "Transitory" After the successful market rescue, the real test arrived. In 2021, as vaccines rolled out, consumer demand exploded, and fiscal stimulus continued to take effect, inflation began to climb. Powell made a judgment he would be repeatedly questioned about later—he believed it was "transitory." Supply chain bottlenecks would eventually ease, demand would naturally recede, and monetary policy did not need an aggressive response. This "miscalculation" became the heaviest policy stain on his eight-year tenure. By June 2022, U.S. CPI year-over-year surged to 9.1%, a four-decade high. Stanford University Hoover Institution economist John Cochrane likened the Fed's framework to a "pre-built Maginot Line"—designed for old threats, useless when a new one suddenly appeared.
Powell did not evade congressional questioning. Facing it, he cited a famous line from Frank Sinatra:
I've had a few regrets, sure. Who wouldn't really want to do things differently? But honestly, you don't get a do-over.
The correction came late, but with unprecedented force. From 2022 to 2023, the Fed raised interest rates at the fastest pace in nearly forty years, cumulatively hiking the federal funds rate by over 500 basis points. At the Jackson Hole symposium in August 2022, Powell delivered an eight-minute speech, clearly warning that bringing down inflation would bring "pain," channeling the spirit of Paul Volcker and sending a firm signal to the markets. That evening, a country band played at the reception dinner. In previous years, he would have taken to the dance floor. This time, he remained seated. He told a colleague:
After giving a speech like that, you don't deserve to dance.
Soft Landing: The "Mission Impossible" But Powell did not swing to the other extreme. Some economists and market participants advocated "shock therapy"—actively inducing a recession to completely kill inflation. Powell refused:
We just aren't going to hike rates, cause the economy to crash, and then clean up the mess.
In the summer of 2024, that "soft landing," which almost everyone thought impossible, quietly materialized: inflation fell sharply, wages rose only modestly, the Fed began cutting rates in September, and the widely anticipated recession did not occur. "I think this will be remembered as one of the finest performances in modern Fed history," Singh said. Powell himself admitted this winning streak was one of his most astonishing achievements—though inflation never returned to the 2% target during his tenure, leaving this unfinished task for his successor.
The Final Battle: He Did Not Become Burns But Powell's historical legacy likely won't be defined by any economic data. When Trump returned to the White House for a second term, political pressure on the Fed escalated from verbal abuse to a systematic legal offensive. The President publicly called Powell the "biggest loser" and a "dope," openly discussing the possibility of firing him; the White House, citing cost overruns in the Fed headquarters renovation, pushed the Justice Department to launch a judicial investigation into Powell; simultaneously, the Trump administration sought to remove Fed Governor Lisa Cook, a case currently pending in court—all unprecedented in the Fed's century-long history. Analysts widely believe the true motive behind the investigation was to pressure the Fed into cutting rates for political electoral gain.
In January 2026, Powell did something that shocked the entire financial world. On a Sunday evening, he released a video, proactively disclosing to the public that he was under a Justice Department investigation and framing it as:
The Fed sets interest rates based on what is most beneficial for the public, not based on the consequences the President prefers.
ECB President Christine Lagarde's assessment of him was: "Powell has an inner strength and a principled understanding of duty that is deeply rooted within him." Even critic John Cochrane, who had accused Powell of being "insatiable," ultimately offered this historical judgment:
Powell will go down in history for his final great act—standing up to Trump. I think it reveals his honesty, decency, and reverence for the institution. I doubt anyone else could have done better.
Staying, Because the Fight Isn't Over At his final press conference, Powell announced another decision that surprised markets—he would remain on the Federal Reserve Board after his term as chair ended. This makes him the first former chair to stay on at the Fed since Marriner Eccles in 1948. Powell's condition for staying was that the judicial investigation must be resolved in a "transparent and final" manner. However, the Justice Department only provided private assurances, hinted it could be reopened at any time, and issued no public statement of exoneration. The Cook removal case also remains unresolved. It seems the fight to defend the institution is not truly over. People familiar with Powell noted this decision was a "fundamental counterpunch" to the Trump administration—the criminal investigation not only failed to force him out but instead solidified his resolve to protect the institution. "Without this investigation, Powell would never have seriously considered staying," these individuals stated. Former senior Fed adviser Jon Faust offered this prediction:
Given that Powell is repeatedly demonstrating to them that their threats cannot constrain him, and the administration seeks credible assurances, I expect his tenure may last for quite some time.
Staying itself is not without cost. Former Cleveland Fed President Loretta Mester pointed out that every future vote Powell casts on the Board will be interpreted as a political signal:
If at some point he has to cast a dissenting vote, it will raise more questions: 'Is the Fed becoming politicized?'
Powell himself is aware of this dilemma. He said he does not intend to be a "high-profile dissenter" nor act as a "shadow Fed chair." What he hopes for is simpler— "a return to a state of respect for legal norms and normalcy, letting the Fed do what we are supposed to do." As for how long he will stay—his board term could last until early 2028, but he has not given a clear answer. A person who long served as a senior adviser to him stated:
I expect his tenure may last for quite some time.
A Legacy of Both Credit and Blame Eight years, two terms: a pandemic, an inflation "miscalculation," a soft landing, and a political offensive that nearly shook the Fed's foundations. History's final verdict on Powell will be a mixed ledger of credit and blame—five consecutive years above the 2% target is an unavoidable failure of duty; but that video, that battle to preserve independence, may be enough to forever separate him from Burns. Fed historian Peter Conti-Brown said:
His place in history, based on any one of these alone, would already be monumental.
And that portrait in the hallway awaits the next person to pass by it.
Comments