Jerome Powell will leave the Federal Reserve chair on May 15 but said he will stay on the Fed's Board of Governors for an unspecified period. The Fed left its benchmark rate unchanged in a divided vote, while the Senate Banking Committee voted along party lines to advance President Trump's nominee, Kevin Warsh. Powell said he won't resign his governorship until an investigation into the Fed's headquarters renovation is complete and he criticised attacks on the institution by the White House. His decision keeps a Fed board seat occupied as Warsh moves toward confirmation.

Powell's exit and immediate plans

Jerome Powell has served eight years as the Fed's chair. His chairmanship ends on May 15. He told reporters he will step down as chair on that date and that he plans to remain on the Board of Governors "for a period of time to be determined," while a probe into the Fed's headquarters renovation continues.

"I've said that I won't leave the board until this investigation is well and truly over with transparency and finality, and I stand by that," Powell said, using his full title, Jerome Powell, Fed Chair, at the post-meeting news conference. He added he was "encouraged by recent developments" but would watch the remaining steps "carefully."

Powell noted he has two years left on his governor term. He said he plans to keep a low profile once he is no longer chair. "There's only ever one chair," he said. "When Kevin Warsh is confirmed and sworn in, he will be that chair."

Why he is staying

Powell tied his decision to remain on the board to the legal and oversight process around the renovation matter.

Federal prosecutors recently moved away from a criminal case, and some aspects of the probe were referred to the Fed's inspector general, developments Powell called encouraging.

He criticised attacks on the institution by the White House. "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," Powell said. He described the criticism from President Donald Trump as "rare in our 113-year history."

What staying means for the board's balance

By saying he will remain, Powell keeps a governor's seat that otherwise could have opened when his chair term expired. That has immediate political consequence. It blocks President Trump from securing a majority of Trump appointees on the seven-member board while Powell remains.

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Kevin Warsh will probably clear a Senate floor vote after the Senate Banking Committee voted 13-11 to advance his nomination on party lines. Warsh, a former Fed official, has argued for lower interest rates in the past. He has also said he would pursue broad changes at the Fed if confirmed.

Powell's choice to stay while Warsh advances means the new chair could take the helm without replacing Powell's governor seat right away. One consequence is that the White House wouldn't immediately add another vote to the board simply by installing Warsh as chair. Stephen Miran, a Trump appointee whose term has expired, is continuing to serve and would leave after Warsh is confirmed, sources said.

Policy split and the last Powell meeting

The Fed left its benchmark rate unchanged at 3.6% at what many expected would be Powell's final policy setting as chair. The decision reflected a divided Federal Open Market Committee. Three officials dissented in favour of removing wording that signalled a future rate cut, and a fourth dissented in favour of an immediate cut.

The split shows a committee that isn't united on the near-term path for rates. Powell presided over that vote and then took questions. He welcomed Warsh publicly and said he would defer to the incoming chair. He also defended the Fed's independence in the face of political pressure.

Warsh has said he favours rate cuts. But Fed officials noted inflation remains above the 2% target, at a level described in committee comments as above 3%. That fact complicates any quick move to lower rates, especially if inflation trends remain elevated.

The timing of Warsh's advancement and Powell's announcement was affected by legal developments tied to the renovation investigation. A subpoena served on Powell by U.S. Attorney Jeanine Pirro was rejected by a court, and prosecutors shifted aspects of the inquiry out of the criminal track and toward the Fed's inspector general.

Those shifts removed a major procedural roadblock to Warsh's confirmation, lawmakers and officials said publicly. Some senators had threatened to stall the nomination unless investigators cleared up outstanding issues. The committee vote came after federal prosecutors signalled the criminal element of the probe wouldn't proceed.

Financial markets will watch the transition closely. Traders and investors had already priced in a hold at 3.6% for this meeting. Powell's decision to remain on the board will affect how quickly the incoming chair can change the balance of votes on the Board of Governors.

Policy staff and Fed communications teams face a period of overlap between chair and governor responsibilities. Warsh, if confirmed by the full Senate, will assume the chair role. Powell said he intends to keep a low public profile as a governor, which could limit overlap in public messaging. Internally, however, an experienced former chair will remain available in the Fed's governance mix for a period.

The episode highlights the political pressures surrounding monetary policy. President Trump had publicly criticised Powell and pushed for lower rates. Powell said those comments were a strain on the institution's independence. He argued the public depends on the Fed being able to set policy without political considerations.

For lawmakers, the renovation probe became a lever in the confirmation fight. Some senators who had resisted Warsh's nomination cited concerns about independence and the ongoing inquiry. Others moved to advance the nomination after prosecutors shifted the investigation's posture.

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Powell said he plans to keep a low profile as a governor, while Warsh now moves to a full Senate vote on his nomination.

This article was created with AI assistance.