Powell to stay at US Fed after chair term ends, breaking 78-year tradition
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More news: At the usual post-meeting press conference, Jay Powell said he would remain at the Fed as a governor after his term as chair ends on 15 May.
The decision breaks with the convention that outgoing chairs depart quickly which has been unbroken since 1948, according to records cited by the New York Times.
Powell said he would serve “for a period of time to be determined,” citing the Justice Department’s unresolved investigation into cost overruns at the Fed’s Washington headquarters as the reason for staying.
The DoJ dropped the inquiry last Friday but left open the possibility of restarting it. Powell made clear his conditions for leaving had not been met, having previously stipulated he would not leave the Fed until the investigation was “well and truly over, with transparency and finality.”
The decision also sets up a fresh clash with Donald Trump, who has vowed to fire him if he does not leave when his chairmanship ends.
What they said: When asked if he believed his replacement Kevin Warsh would stand to political pressure from the US President, Powell said he believed Warsh when “he testified very strongly to that effect,” adding “I’ll take him at his word.”
In prepared remarks, Powell said: “I’ve said that I will not leave the Board until this investigation is well and truly over with transparency and finality and I stand by that. I am encouraged by recent developments and watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe in the best interest of the institution and the people we serve.
“After my term as chair ends on May 15th I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There’s only ever one Chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that Chair. Once sworn in his colleagues will elect him to Chair the FOMC as well. I’m confident the Fed ill will continue to do its work with objectivity, integrity and a deep commitment to serve the American people.”
US Fed holds rates in most divided decision since 1992
The news: The Federal Reserve held rates steady for a third straight meeting in an 8-4 vote, as four officials split over the path ahead.
It was the most divided decision since 1992 and came after the Senate Banking Committee cleared Kevin Warsh to replace Jarome Powell as chair before his term expires on 15 May.
Three regional presidents — Beth Hammack from Cleveland, Neel Kashkari from Minneapolis and Lorie Logan from Dallas — backed the hold but voted against statement language signalling a bias toward future rate cuts. Governor Stephen Miran, a Trump ally, dissented in the opposite direction, favouring a quarter-point reduction.
What they said: The Fed’s statement said inflation was “elevated, in part reflecting the recent increase in global energy prices,” as Brent crude topped USD119 per barrel, as the US-Iran standoff over the Strait of Hormuz continued.
The numbers: Following the decision, markets were pricing in no full rate cut through March 2027, according to the FT, while two-year Treasury yields rose and stocks dipped slightly.
The sources: Federal Reserve, Bloomberg, Reuters, The Wall Street Journal
