Powell could stay at Fed even after being removed as chair
The ongoing saga surrounding President Donald Trump’s attempts to influence the Federal Reserve has taken an unexpected turn, with speculation mounting over the future of current Chair Jerome Powell. Powell’s term as the head of the central bank is set to end on May 15, and there are indications that Trump may nominate his successor sooner rather than later. However, Powell’s term as a governor extends until January 31, 2028, leaving room for uncertainty about his future at the Fed.
Traditionally, outgoing Fed chairs have also stepped down from their governor roles, but Powell may choose to defy this precedent if he believes that threats to the central bank’s independence require him to stay on. The growing pressure from Trump to exert control over the Fed, coupled with the recent revelation of a Justice Department investigation into Powell, has raised speculation that he may decide to remain in his position.
Some analysts believe that Trump’s efforts to influence monetary policy could prompt Powell, as well as other current governors like Michael Barr and Philip Jefferson, to stay on despite their terms expiring in the coming years. The possibility of all current governors remaining in their roles is gaining traction on Wall Street, as concerns about Fed independence continue to mount.
While traders are betting on Powell’s departure, with prediction markets giving a 70% chance of him leaving before August 2026, Powell himself has remained tight-lipped on the matter. Trump’s attempts to oust Powell could backfire and result in a more independent Fed, with other officials taking a firm stance against political interference in monetary policy.
In the midst of this uncertainty, the future of the Federal Reserve remains in question. Powell’s decision on whether to stay on as a governor, along with the potential appointment of a new Fed chair by Trump, could have far-reaching implications for the central bank’s independence and the direction of monetary policy in the years to come.
