Jerome Powell will finish his term as chair of the Federal Reserve’s Board of Governors on May 15. However, he plans to stay on the board for an indefinite time. This decision breaks a 75-year tradition where the Fed chair leaves the board after their term ends.
Powell can do this because his term on the board will officially end in early 2028. This move may upset President Donald Trump, who has openly criticised Powell. Trump wants the Fed to lower interest rates further, which can encourage borrowing and support higher stock prices.
The tension between Trump and Powell increased when the U.S. Department of Justice started a criminal investigation into Powell. The investigation looked into whether Powell lied to Congress about a costly renovation of the Federal Reserve’s headquarters.
Following this, Powell posted a video, calling the probe a punishment from Trump for not following his wishes. This investigation drew criticism from lawmakers like Senator Thom Tillis, who stated he would not support the incoming Fed Chair unless the investigation was stopped.
In late April, the DOJ closed its investigation into Powell but referred the matter to a different inspector general. Powell now insists he will stay on the board until the investigation is completely finished.
Critics, including Senate Banking Committee chair Tim Scott, argue that Powell should resign. If Powell were to leave the board, Trump could appoint someone who supports rate cuts, but decisions still require a majority on the committee. Thus, it remains unclear how much Powell’s presence changes things.
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