Federal Reserve Chairman Jerome Powell is set to leave his post later this month, but he’s not going anywhere. That’s because while his term ends on May 15, Powell has made the unusual decision to stay on as a Federal Reserve Board governor until 2028, likely to deny President Donald Trump the opportunity to appoint someone more in line with his economic agenda.
Trump nominated Kevin Warsh in January to replace Powell, but it’s not clear that having a new chairman will be of benefit to Trump, who has been pushing for the Fed to cut interest rates since he began his second term. Powell cut rates a couple of times ahead of the 2024 election when inflation was higher, but has largely refused to do so since.
“The decision that Powell will make on whether to remain on the board will shape the early term of Kevin Warsh, who appears likely to receive confirmation as Powell’s successor,” Joe Brusuelas, principal and chief economist for RSM US, wrote in a note Wednesday, The Hill reported.
“Should Warsh arrive at the Fed and intend to cut rates, Powell would almost surely end up dissenting if he remains on the board,” he continued. “And that would in effect make Powell the shadow chair well into 2028.”
The outgoing Fed chair said he plans to stay on as a governor until the probe into his handling of the bank’s renovations is “well and truly over with transparency and finality.”
To that end, U.S. Attorney for the District of Columbia, Jeanine Pirro, announced on Sunday that she may reopen a criminal investigation into Federal Reserve Chair Jerome Powell, depending on the findings of an inspector general’s inquiry regarding building renovations at the Federal Reserve.
Her statement comes just over a week after she revealed on social media that she had instructed her office to suspend its investigation into Powell. This also follows the Senate Banking Committee’s approval of Warsh, Scripps News reported.
“I want to see what’s there. If there’s something there, great. And if there isn’t, I’ll go home,” Pirro told CNN’s Jake Tapper on “State of the Union.” The Justice Dept. first launched its probe into Powell’s handling of the central bank’s renovations in January.
Retiring North Carolina Republican Senator Thom Tillis delayed the committee vote to advance Warren’s nomination for months due to the investigation into Powell. He argued that the investigation was politically motivated and threatened the independence of the Federal Reserve.
“At the end of the day, no crime was committed, and the prosecutors I spoke with all agree,” Tillis said. “That’s what I was fighting against, not any single prosecution, but a process that would undermine the independence of the Fed.”
In addition, the DC US attorney also told Tapper that her office will make a motion to appeal a federal judge’s ruling quashing her subpoenas in the investigation, arguing that “it’s extremely important for us as prosecutors, the precedent that it sets to prevent us from going into a grand jury.”
In an announcement late last month suspending the probe into Powell, Pirros said the Office of the Inspector General for the Federal Reserve would conduct its own probe of Powell. She then noted that after the IG concludes its investigation, her office “will not hesitate to restart a criminal investigation should the facts warrant doing so.”
Tillis, a member of the Senate Banking Committee, previously stated his support for concluding the investigation into Powell. When asked if he believes Warsh will retain some independence from the Trump administration, he replied, “I think so.”
Trump has been highly critical of Powell, whom he appointed during his first term. In one Truth Social post on April 29, Trump wrote “Jerome ‘Too Late’ Powell wants to stay at the Fed because he can’t get a job anywhere else — Nobody wants him.”
