Powell Plans Move Not Made Since 1948

Jerome Powell says he plans to remain on the board of the Federal Reserve after his term as chair ends next month "for an undetermined period of time." In a press conference after the central bank's latest interest rate decision, Powell cited the recent legal actions taken by the Trump administration against the Fed as his reason for staying on, the AP reports. Powell's chair ends May 15, but he serves a separate term as a governor that lasts until January 2028. Chairs typically leave the board when their leadership terms end. Powell would be the first ex-chair to remain at the Fed since Marriner Eccles in 1948.

• "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," Powell said. "I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully."
• The move would deprive Trump of the opportunity to pick his replacement and fill another seat on the Fed's seven-member board. Three of the seven current governors are Trump appointees. Earlier this month, Trump threatened to fire Powell if he stayed on.

• "I had long planned to be retiring," Powell said, per CNBC. "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."
• "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."
• The decision to stay on could worsen tensions with the Trump administration and would create what some analysts refer to as a "two popes" scenario, with a chair and former chair both on the Fed's board, the AP reports. In that case, divisions among policymakers could increase, if some decided to follow Powell's lead rather than that of Kevin Warsh, whose nomination advanced on Wednesday.

• The Fed on Wednesday kept its short-term rate at around 3.6% and retained language in its statement suggesting the next move would be a rate reduction. Three officials dissented in favor of removing the reference to a future cut, while a fourth, Stephen Miran, dissented in favor of an immediate rate cut.
• Warsh has promised "regime change" at the central bank and may make sweeping changes to its economic models, communications strategies, and balance sheet, but he will likely find it harder to implement the rate cuts Trump seeks with inflation topping 3%, above the Fed's target of 2%.
• "This is my last press conference as chair, and I will close with a few thoughts," Powell said. He congratulated Warsh and wished him well. Powell added: "The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive, stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose."