Powell May Stay at Fed After Term Ends Despite Warsh Pick

President Donald Trump has picked Kevin Warsh to replace Jerome Powell as chair of the Federal Reserve when Powell's term ends in May 2026. But talk continues that Powell might stay on the Fed's board of governors until his term there runs out in January 2028, especially to guard the central bank's independence from White House influence.

Background

Jerome Powell took over as Fed chair in February 2018 after Trump nominated him. Powell first joined the Fed board in 2012 under President Barack Obama. Trump picked him for the top job, but their relationship soured over time. Trump has pushed for lower interest rates, calling Powell names like 'jerk' in public statements. Powell has kept rates steady lately, even as the Fed cut them three times late last year before pausing in January.

Powell's four-year chair term got renewed in 2022 by President Joe Biden and confirmed by the Senate. That runs out in May 2026. His spot on the seven-member board of governors lasts until January 2028. Fed chairs often step down when their leadership term ends, but they can stay as regular governors if they want.

Tensions boiled over in January 2026 when the Department of Justice hit the Fed with grand jury subpoenas. These tie back to Powell's June 2025 testimony to the Senate Banking Committee about a project to fix up the Fed's old office buildings. Powell called it a pretext. He said the real issue is the Fed setting rates based on its view of the economy, not White House wishes.

Trump, now back in office, named Warsh, a former Fed governor from 2006 to 2011, as his choice for the next chair. Warsh left during the financial crisis. Some in financial circles see Warsh as more open to Trump's push for easier money policy. But Powell's possible decision to stick around as a board member has people talking.

The Fed board makes key choices on rates and bank rules. Governors serve 14-year terms, but chairs and vice chairs get four-year stints that need Senate approval. Right now, the board has seven members, including three Trump first picked: Michelle Bowman, Chris Waller, and a newer one named Miran. Powell was Obama's pick originally.

Key Details

Powell spoke at a news conference after the Fed's January meeting. The central bank held rates steady amid economic questions. Reporters asked about his plans past May.

"No, and I really once again have nothing for you on that today," Powell said when asked if he decided to stay on the board.

He gave advice to his successor. Stay out of politics, he said. Work hard with Congress for accountability. Praise the Fed staff for their good work.

Republican Senator Thom Tillis, on the Senate Banking Committee, spoke out after the DOJ move. He said he would block any Fed nominations, including for chair, until the probe clears up.

"If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none," Tillis stated.

Fed Board Timeline

Powell's chair term: Ends May 2026.
Board term: Ends January 2028.
Vice Chair Philip Jefferson: Ends September 2027.
Vice Chair for Supervision Michelle Bowman: Ends June 2029.

The Senate must confirm the next chair. Trump's first term saw fights over Powell, but the Senate backed him 84-13 in 2018. Biden's renewal passed 80-19 in 2022. Warsh's path could face pushback if Democrats link it to the DOJ issue.

Warsh has ties to Wall Street and worked at Morgan Stanley before the Fed. He pushed for early crisis responses back then. Some Fed watchers say picking him signals Trump wants quicker rate cuts to boost growth. Powell has resisted, pointing to inflation risks.

The Fed renewed terms for 11 of 12 regional bank presidents in December 2025. Only Atlanta's Raphael Bostic is leaving soon, in February 2026. That keeps the broader Fed system stable.

What This Means

If Powell stays on the board, he could vote against rate cuts Trump wants. The board needs a majority for big moves. With three Trump picks already there, Powell as a fourth vote might balance things. His presence would signal the Fed won't just follow the president.

Wall Street watches closely. Stocks rose after the January Fed meeting on hopes for steady policy. But Trump's rate pressure and the probe add uncertainty. Bond markets price in possible cuts later this year, but slower than Trump demands.

Former Fed leaders and Treasury secretaries have backed Powell publicly amid the DOJ news. They call the probe an attack on Fed freedom. Banks rely on the Fed for clear rules. Any shift to match White House goals could shake trust.

Powell has not said if he will stay. He dodged questions twice in January. As May nears, his choice will shape the Fed's next years. Warsh, if confirmed, takes the chair spot but not the board majority alone.

Economists split on Powell's odds of staying. Some say the DOJ fight makes him dig in. Others think he will leave to avoid more clashes. Senate fights over confirmation could delay things. Tillis's stance blocks progress until the legal cloud lifts.

The Fed's job stays the same: control inflation and support jobs. Powell repeated that in January. Independence lets it do that without daily politics. Powell's board term gives him a platform to defend that if he chooses.

Trump hinted he is near naming his pick, with Warsh out front. Markets wait for Senate hearings. Powell's silence keeps options open. His stay could mean steady policy. A full exit hands more control to Trump's group.

Regional presidents vote on rates too, through the FOMC. Their long terms limit quick changes. Bostic's exit is the only near-term shift. That setup protects against fast overhauls.