Jerome Powell said Wednesday that he will continue to serve on the board of governors of the Federal Reserve after his chairmanship of the central bank ends next month.
Powell said his decision to remain as governor is based on concerns over “legal attacks” he said the Trump administration has taken against the Fed. Powell’s term as governor lasts until January 2028 but he said he has not determined how long he will remain on the board.
“These legal actions by this administration are unprecedented in our 113-year history and there are ongoing threats of additional actions.,” Powell said at a press conference on Wednesday. “I worry that these attacks are battering the institution and putting at risk the thing that matters to the public, which is the ability to conduct monetary policy without taking into account political factors.”
Powell argued that Fed independence is part of the “absolute foundation” of the success of the American economy.
During Trump’s first term, he was often severely critical of Powell, accusing him and the Fed of unnecessarily raising rates and keeping them too high. In his second term, Trump’s criticisms have become even sharper. Powell said these criticisms did not play a role in his decision to stay.
“This has nothing whatever to do with verbal criticism by elected officials. I’ve never suggested that such verbal criticism is a problem and neither has anyone else here,” Powell said.
Powell denied that he was remaining on the Fed to prevent President Trump from being able to appoint another governor. Currently, the Fed’s board has three Trump appointees. Powell was originally appointed as a Fed governor by President Barack Obama in 2012. President Trump tapped him to lead the central bank in 2017 and Powell was reappointed by President Biden.
Traditionally, Fed chairmen step down from the Fed altogether when their tenure as the institution’s leader ends. The last chair to continue on the Fed’s board was Marriner Eccles from 1948 to 1951.
Powell said he plans to keep a “low profile” as a governor of the Fed and to avoid undercutting Warsh’s leadership. He said that once Warsh has been confirmed as chair of the Fed board, the Federal Open Markets Committee would vote to make Warsh its chair as well.
The Fed board chair is appointed by the president and confirmed by the Senate but the FOMC chair is elected by its members. There has been speculation that Powell could continue on as FOMC chair through the end of the year or even longer but his statement on Wednesday made it clear he does not expect to do so. The chairman of the Board of Governors leads the central bank, including overseeing staffing matters. The FOMC sets the Fed’s monetary policy.
Powell had been engaged in a public dispute with the Justice Department after prosecutors subpoenaed the Fed for information about cost overruns in the renovations of the Fed’s headquarters in Washington, D.C. In a touch of historical poetry, the building is named for Eccles. In January, Powell put out a video in which he claimed, without evidence, that the subpoena as an attempt to influence monetary policy and the cost overrun investigation as a pretext.
Jeanine Pirro, the U.S. Attorney for the District of Columbia, has denied that her investigation was motivated by politics or a dispute over interest rates. President Trump has said he did not know of the investigation prior to Powell’s disclosure of it. Trump joined Powell for a tour of the building site at the center of the controversy last summer.
Sen. Thom Tillis, the North Carolina Republican, announced shortly after Powell’s video that he would not agree to support the nomination of Powell’s successor until the Justice Department dropped the investigation. After President Trump nominated Kevin Warsh for the position, Tillis said he supported Warsh but would keep the nomination on hold in the Senate Banking Committee while the investigation continued.
A federal judge quashed the subpoened, saying the Justice Department lacked proper grounds for the investigation. Pirro’s office is appealing the decision.
Last week, Pirro said she had instructed her office to close the investigation. She said that the inspector general of the Fed would continue the probe into the renovation, adding that she would be able to restart the investigation if new facts came to light. Tillis said over the weekend that he was satisfied that the matter was resolved. On Wednesday, prior to Powell’s press conference, the Senate banking committee voted along partisan lines to advance Warsh’s nomination.
Tillis said that he was assured that the investigation would only be re-opened if the inspector general made a criminal referral to the Justice Department. As well, he said that the Justice Department had told him that it would not use the pending appeal to re-open the investigation in the absence of a criminal referral.
Powell on Wednesday congratulated Warsh on his advancement out of the Senate banking committee.
Powell cited Pirro’s statement that the investigation could be reopened as one of the reasons he has decided not to leave the Fed’s board. Powell said he was encouraged by the promises not to reopen the investigation, but not satisfied that these had met his previously stated criteria for leaving that the investigation is “well and truly over with transparency and finality.”
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