Powell to retire as Chair, but will stay on Fed board

With his term expiring on May 15, Jerome Powell appeared in front of reporters for the final time as Federal Reserve Chair, though he said he will remain on the Fed’s Board of Governors for a while.

Powell said he will not step down until the probe into him over the Fed’s headquarters renovation is fully resolved, stressing the need for transparency and finality. He added that recent developments influenced his decision to stay. He also warned that political attacks on the Fed could harm its independence. 

The DOJ ended its criminal investigation but has since referred the matter to the Fed’s inspector general, leaving open the possibility it could be reopened.

Leadership transition underway
Powell’s decision comes as the Senate moves toward confirming Kevin Warsh, nominated by President Donald Trump, as his successor. Trump’s appointees already hold seats on the board, and Powell’s move prevents an immediate shift in control.

Trump had earlier threatened to fire Powell if he stayed beyond his term.

Meanwhile, at a Senate hearing, Warsh said the Fed needs “messier meetings” and more open disagreement, contrasting with its traditional consensus-driven approach.

Recent Fed meetings have seen rare dissent, with regional presidents Neel Kashkari, Beth Hammack, and Lorie Logan opposing signals of near-term rate cuts amid persistent inflation and higher energy prices.

The split highlights growing uncertainty over inflation, tariffs, and geopolitical risks that could keep borrowing costs elevated for households and businesses. 

By staying on, Powell temporarily blocks the Trump administration from gaining a majority on the seven-member board that guides monetary policy. Markets now await the Fed’s June meeting.

What about interest rates
The Federal Reserve kept interest rates unchanged at 3.5%–3.75% but revealed sharp internal divisions. 

The Federal Open Market Committee split 8–4, its biggest dissent since 1992, as some officials opposed hints of future rate cuts. Inflation remains above 3%, complicating policy decisions.