Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
After enduring a series of attacks on the Federal Reserve, Jerome Powell can now be confident that the central bank is in safe hands to step down completely when a new president takes over.
Earlier this month, the Fed reappointed its regional bank presidents a little earlier than usual, which surprised Wall Street and eased concerns about its independence in the face of President Donald Trump’s persistent demands for deeper rate cuts.
This follows recent suggestions from the Trump administration that new conditions should be imposed on Fed chairs, sparking fears of a purge. This fits a pattern of extreme pressure being exerted on policy makers. Trump has relentlessly insulted Powell for not easing more, considered firing him, threatened to sue him for cost overruns on the Fed headquarters renovation, and is still trying to oust Gov. Lisa Cook.
Given Powell’s commitment to Fed independencethere were doubts that he would leave the board of governors when his replacement as president arrived, contrary to tradition, in order to retain a vote on the Federal Rate-Setting Committee and help ensure that policy remained apolitical. Her term of office of president expires May 15, 2026, but his term as governor extends until January 2028.
But with the return of regional chairs, it adds some stability to the FOMC, which is made up of governors and chairs, potentially allowing it to ride off into the sunset.
“I don’t think Powell wants to stay. I think he’s done with this job, and I don’t blame him,” said Christopher Hodge, chief U.S. economist at Natixis CIB Americas. Fortune.
He put a high probability that Powell will leave the board, but some uncertainties remain. One of them is Trump’s choice to become the new Fed chairman. The names currently under consideration — Kevin Hassett, Kevin Warsh and Chis Waller — would be acceptable, but an unserious candidate coming from left field would give Powell pause, according to Hodge, who was previously a senior economist at the New York Fed.
Another unknown is how the Supreme Court will rule on Trump’s effort to fire Cook for mortgage fraud, which she had denied. If the justices determine that the White House can easily remove governors, then Powell could stay.
“But ultimately, I think this reappointment of these regional Fed chairs is an obstacle that he wanted to overcome, and I think it certainly helped pave the way for him to resign after the May meeting,” Hodge said.
He added: “As long as Powell is fairly certain that the safeguards remain in place and that the Fed is able to remain credible in the long term, then I think he will step down” from the board of governors.
Robert Kaplan, a vice chairman at Goldman Sachs and former president of the Dallas Fed, said the reappointment of Fed chairs was big news that hadn’t gotten much attention.
He told CNBC Last week, some feared that a shakeup in the Board of Governors could lead to changes in the Fed chair, which must be approved by governors.
“I think it’s possible that it won’t happen. And that means the next Fed chair will have to get seven votes through persuasion and debate and building consensus. You’re not going to come in with seven telegraph votes,” Kaplan added, referring to the need to vote for a majority in the 12-member FOMC.
He also urged Powell not to remain on the board after his term as chairman expires. If Powell hangs on, he could be seen as a thorn in the new president’s side, Kaplan said.
“In the same way that a CEO would leave and leave it to their successor, I think it’s the most gracious thing to do,” he said. “I think Jay is a kind person and I think this is the right thing to do for him.”
