Jerome Powell said a series of legal attacks on the Federal Reserve left him "no choice" but to remain on the Fed’s Board after his term as chair ends on May 15. The Fed left its benchmark rate at 3.50% to 3.75% at the policy meeting that set up what may be his final decision as chair. Powell told reporters he intends to stay on the board until the legal matters are resolved and to keep a low profile while he does so. The Senate Banking Committee advanced Kevin Warsh’s nomination for the chair role along party lines, moving the confirmation fight toward the Republican-controlled Senate.

The Fed kept borrowing costs unchanged at 3.50% to 3.75% at its latest meeting. Policymakers voted on the statement that accompanies the rate call. The decision was notable for a larger-than-usual level of dissent inside the committee, with several officials breaking from the majority.

Powell says he'll remain as governor

Jerome Powell, who has led the central bank through a long fight to bring inflation back toward the Fed’s target, said he won't leave the Board of Governors once his chair term expires. "I had long planned to be retiring," Powell said. "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 comments mark a shift from previously stated plans to step away after his chairmanship ends on May 15. Powell said he intends to remain a governor for a period of time and to keep a low profile while he does so. He is eligible to remain on the board through early 2028 under the statutory term limits that govern governors’ appointments.

Legal pressure and institutional concerns

Powell framed his decision as a response to legal moves that he and others at the Fed view as exceptional. He said the series of actions against him in recent months threatens the Fed’s ability to make monetary policy without political interference. "My concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without considering political factors," he told reporters.

The Justice Department last week formally ended a criminal investigation that had looked at whether Powell misled Congress about rising costs tied to the renovation of the Fed’s Washington headquarters. Powell described the legal challenges as rare in the Fed’s 113-year history, and said they were battering the institution.

What happened at the policy meeting

The statement that followed the rate decision reflected strains inside the committee over the near-term path for policy. Some officials pushed back against language that suggested rate cuts were more likely than hikes. Others dissented in the opposite direction and argued for an immediate cut.

Mastheads

The vote produced several dissents, and Fed officials left public guidance that suggests there isn't a single view on the committee about when to ease policy.

Markets reacted to both the rate decision and Powell’s announcement. Traders and investors read the unchanged rate as a sign the central bank isn't ready to start easing, while the dissenting votes signalled concern among some officials about inflation risks. Powell’s continuation on the Board reduces uncertainty over who will occupy a seat with the rank-and-file governors while the Senate considers a new chair.

Kevin Warsh moves closer to confirmation

Meanwhile, the Senate Banking Committee advanced President Trump’s choice to succeed Powell as chair. The committee vote fell along party lines and sets up a final confirmation vote in the Republican-controlled Senate. If the full Senate confirms Kevin Warsh, he would take over the chairmanship while Powell would remain on the board as a governor.

The split between the committee’s partisan vote and the dissenting Fed officials shows a tense moment for monetary policy. Lawmakers are moving ahead with a nominee even as the institution at the centre of that nomination is coping with internal divisions and unusual legal scrutiny of its leadership.

Powell said his role as a governor will be limited in visibility. He told reporters he plans to keep a low profile. That means he won't act as the public face of policy in the way the chair does. But he will still sit on the Board of Governors, participate in votes on FOMC policy and be part of the staff and governance structure that oversees the central bank’s functions.

By staying on the board, Powell preserves a continuity of experience. He led the bank through an era of unusually high interest rates and carried the responsibility for a major policy pivot that began with rapid rate rises. Having an experienced former chair remain as a governor will change the personnel mix on the Board while a new chair takes on public leadership of policy.

Powell’s decision affects both governance and market expectations. It keeps a familiar policymaker inside the Fed’s decision-making circle while a new chair moves into the top job. That split between the seat that runs the committee and the seats that shape internal votes can change how the bank operates in practice.

Investors will watch how the new leadership duo aligns on interest-rate timing and policy guidance. The public split among Fed officials over the statement language shows there's no clear consensus on when to cut rates. That makes forward guidance from the new chair and from the Board of Governors more important to how markets set expectations for future rate moves.

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The committee vote moves Warsh to a final confirmation in the Republican-controlled Senate, which will decide whether he replaces Powell as chair while Powell remains on the Board.

This article was created with AI assistance.