Jerome Powell ends term as Federal Reserve chief clouded by Trump tumult

Sylvan LaneFri, May 15, 2026 at 10:00 AM UTC

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Jerome Powell’s stint leading the Federal Reserve is finished, but his battle with President Trump is far from over.

Powell’s second four-year term as chair of the Fed board ended Friday, two days after his successor, Kevin Warsh, was confirmed by the Senate as the bank’s next chief.

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After leading the bank for the past eight years through a series of political and economic crises, Powell is handing over the reins of the Fed to Warsh while pledging to keep a low profile.

Even so, his decision to stay on the Fed board after the end of his chairmanship could keep Powell in Trump’s crosshairs and define his legacy at the bank.

Though Powell’s term as Fed chair ended Friday, his separate 14-year term as a member of the Fed board does not expire until January 2028. While the vast majority of his predecessors left the bank upon the end of their chairmanships, Powell said he would remain at the Fed until he was confident the bank had fought off the Trump administration’s attacks on its independence.

“I had long planned to be retiring,” said Powell, 72, last month at his final press conference as Fed chair. “The things that have happened in the last three months have, I think, left me with no choice but to stay until I see them through.”

Trump’s pressure on Powell backfires

As Trump’s first year back in the White House wound down, the president seemed ready to move on from his feud with Powell with a newly nominated Fed chief.

Unlike several of Trump’s first-term Fed nominees, Warsh had the unanimous support of Republican senators. The early resignation of former Fed board member Adriana Kugler also gave Trump more flexibility to shape the bank after Powell’s departure, lining up what appeared to be a clear path for Warsh’s confirmation.

The president, however, upended his plans for the Fed with the opening of a legal battle with Powell and the bank.

“Treasury Secretary Scott Bessent and Senate Banking Committee Chair Tim Scott have criticized Powell for remaining on the board, saying he is breaking with decades of precedent,” explained Ian Katz, managing partner at Capital Alpha.

“But the other side is that the Trump administration’s attacks on Fed independence, including an attempt to fire Governor Lisa Cook and the DOJ investigation of Powell, were also unprecedented. Many believe that Bessent’s and Scott’s comments in fact validate Powell’s decision to stick around.”

Powell revealed in December that he and the Fed were under criminal investigation by the Justice Department, which was probing his handling of renovations to the Fed’s Washington, D.C., headquarters and his testimony about the matter before the Senate.

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In response, Sen. Thom Tillis (R-N.C.), a member of the Senate Banking Committee, announced that he would block all Trump Fed nominees from reaching the floor until the probe was concluded.

Tillis lifted his blockade after U.S. Attorney Jeanine Pirro announced that the investigation would be taken up by the Fed’s own inspector general. While Powell said he was “encouraged” by the decision, he made clear that he did not yet think the Fed was out of the woods.

“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, adding that he would leave the Fed for good once “this investigation is well and truly over, with transparency and finality.”

How Powell staying affects the Fed

Powell has promised to keep a “low profile” while serving on the Fed board despite the unusual circumstances of his presence and to not be a “shadow chair” challenging Warsh’s influence.

Taken at his word, Powell would likely return to being a moderate voice on interest rates among the increasingly fractious Federal Open Market Committee, which is divided over how best to respond to the Iran-driven inflation surge.

While Powell may no longer be steering Fed policy, he could still have a significant impact on the future of the central bank given the unique way its board is constructed.

Each of the Fed board’s seven members serves a staggered 14-year term, but the length of a term does not reset when a new board member replaces a departing one.

If Powell had left the Fed altogether Friday, Trump would have been able to nominate Warsh to serve the remainder of Powell’s term as a board member while keeping another Fed board seat open for a different nominee.

Instead, Trump was forced to nominate Warsh to the Fed board seat temporarily held by former White House chief economist Stephen Miran, whom the president nominated to replace Kugler last year after her abrupt departure.

“Chairman Powell has been pretty clear, saying that he’s going to stay on as Governor Powell after his term as chairman ends. And I’ll say, from my own experience as the incoming chairman of the Council of Economic Advisers, that transitions are important,” Miran said last week in an interview on Fox Business Network with Maria Bartiromo.

“I think it could be helpful for Chairman Powell to help with the transition, but I think it’s important to make sure that it’s a transition period and that there’s nothing sort of more nefarious going on.”

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