In a historic break from tradition, the outgoing chair says he will remain on the Fed's board after his term expires — because the administration's attacks on the institution have left him no choice
Jerome Powell had long planned to retire. Instead, he is staying. In the most consequential moment of his final press conference as Federal Reserve chair on Wednesday, Powell declared that an extraordinary campaign of legal pressure from the Trump administration had compelled him to remain at the central bank as a sitting governor — well beyond the mid-May expiration of his chairmanship. It is an arrangement without modern precedent, and one that Powell said he felt he had no choice but to accept.
"I had long planned to be retiring," Powell told reporters. "The things that have happened really in the last three months have, I think, left me no choice but to stay until I see them through at least that long." His term as a Fed governor runs until early 2028, giving him the legal authority to remain long after Kevin Warsh is installed as chair.
Powell framed his decision explicitly around protecting the institution from political encroachment. He warned that the administration's actions risk undermining the Fed's foundational ability to set monetary policy without regard to political factors. "These legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of additional such actions," he said. "I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors."
He said he intended to keep "a low profile" as governor and had no desire to interfere with Warsh's leadership of the committee.
A timeline of escalation
The legal pressure Powell cited has built steadily over the past year. Trump attempted to remove Fed governor Lisa Cook in August 2025, citing unproven allegations of mortgage fraud. Cook successfully challenged the move in court, and that case — Trump v. Cook — remains before the Supreme Court, which heard oral arguments in January but has yet to issue a ruling. The outcome is expected to define the limits of presidential power over independent agencies for a generation.
More directly affecting Powell: the Justice Department, working through U.S. Attorney Jeanine Pirro, opened a criminal investigation into the Fed's handling of a costly renovation of its Washington headquarters and in March issued subpoenas to the central bank. Powell successfully challenged those subpoenas. Last week, the DOJ suspended the criminal probe — but Pirro stopped short of ending it entirely, redirecting the matter to the Fed's own inspector general to examine cost overruns. Powell said he is watching the remaining steps carefully and will not leave until the matter is resolved. "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," he told reporters.
If Powell steps down before the legal proceedings conclude, President Trump would gain the opportunity to appoint a third member to the seven-seat Board of Governors — joining nominee Kevin Warsh and first-term holdovers Christopher Waller and Michelle Bowman. That would give the administration a working plurality on the board, with potential implications for the Fed's regulatory posture and long-term rate trajectory. Powell's decision to stay is, in part, a vote against that outcome.
Powell said he expects the transition to Warsh to be orderly. "This is, and will be, a very normal, standard kind of a transition process," he said, adding that he had congratulated Warsh at a dinner in January and had not seen him since.
3.5%–3.75%
easing bias
quarter-point cut
The rate decision and its fractures
The FOMC's actual policy decision — holding the federal funds rate steady at a target range of 3.5% to 3.75% — was widely anticipated. The vote was nonetheless historically divided: four of twelve members dissented, the most at any meeting since 1992. Three regional presidents — Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas — supported the hold but objected to retaining language in the statement implying the next rate move is more likely down than up. A fourth dissenter, governor Stephen Miran, went the other direction, calling for an immediate quarter-point cut.
Market observers saw the three hawkish dissents as a warning shot aimed at the incoming chair. David Kelly, chief global strategist at JPMorgan Asset Management, called it "a renewed declaration of independence" and "a shot across the bow at Kevin Warsh." Jeff Kilburg, founder and CEO of KKM Financial, described it as "the rest of the players letting him know, we're not going to let you lead us here."
Warsh's nomination advanced through the Senate Banking Committee on Wednesday morning in a 13-to-11 party-line vote. Committee chairman Sen. Tim Scott said "Kevin Warsh's leadership is absolutely essential now at the Federal Reserve than ever before." A full Senate confirmation vote is expected within days. A recent CNBC survey of 26 economists, strategists, and analysts found that only half believe Warsh will operate mostly free from political influence — a sign of how much credibility the institution still needs to rebuild, though that figure is up 13 percentage points from a month ago.
What it means for advisors and clients
The Fed's hold leaves consumer borrowing costs firmly in place. Short-term rates on credit cards and home equity lines track the federal funds rate closely and will stay elevated. Mortgage rates, shaped more by inflation expectations and geopolitical risk than by the benchmark rate alone, are similarly unlikely to ease in the near term.
Oil prices surged roughly 7% on Wednesday after reports that Trump plans to maintain a naval blockade of Iran until a nuclear deal is reached, pushing WTI above $106 per barrel. The jump complicates the Fed's read on whether underlying inflation is genuinely decelerating, since energy-driven spikes can obscure the signal from core goods and services. Core inflation is running around 3%, above the Fed's 2% target. The central bank's working assumption is that tariff-driven goods price increases will fade. If that proves wrong, rate cuts recede further — and a handful of officials have already outlined conditions under which rate increases might be warranted instead.
Art Hogan, chief market strategist at B. Riley Wealth, summed up the mood: "One gets the sense that there will be several meetings at least before we see any rate changes by the FOMC, agnostic to who the chair of the Fed is."
1 Powell (independent)
3 Biden appointees
Balance maintained
3 Biden appointees
Trump holds working majority
