Federal Reserve Chair Jerome Powell confirmed he will remain on the Fed’s Board of Governors after his chairmanship ends next month, but vowed he won’t act as a “shadow Fed chair” over his successor.
Final Press Conference
Powell hosted his last news conference after the FOMC voted to hold rates at 3.5%-3.75%. The Senate Banking Committee advanced Kevin Warsh’s nomination as successor hours earlier.
“That’s just something I would never do, the shadow chair thing,” Powell said. “I’m going back to being a governor. I respect the role of chair. I was a governor for six years, and I know what that’s like.”
Powell said he intends to stay for “a period of time to be determined” and plans to be “a very constructive participant in that process, really out of respect for the office of the chair.”
Why Powell Staying
Powell originally planned to retire at the end of his chairmanship. The Trump administration’s criminal investigation changed those plans. U.S. District Attorney Jeanine Pirro issued subpoenas in January as part of a probe into whether Powell misled Congress about the Fed’s D.C. headquarters renovation costs.
Powell called the investigation politically motivated. Courts quashed the DOJ subpoenas as a “pretext” to pressure him into cutting rates or stepping down.
Pirro announced Friday that the DOJ is dropping the investigation, handing it to Fed inspector general Michael Horowitz. Pirro said she would “restart a criminal investigation should the facts warrant doing so.” The DOJ told Powell it would only reopen if the IG submits a criminal referral.
Fed Independence at Stake
“My concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without political factors,” Powell said. “These legal actions by the administration are unprecedented in our 113-year history.”
When asked if staying on was political, Powell replied: “I’m literally staying because of the actions that have been taken. I had long planned to be retiring. The things that have happened, really in the last three months, left me no choice but to stay until I see them through.”
Powell’s governor term runs until January 31, 2028, though he said he’ll leave when the investigation is “well and truly over with finality and transparency.” Trump picked Powell to serve as Fed chair starting in 2018, though he went on to repeatedly threaten to fire him for not cutting interest rates.
Marriner Eccles, who served as Fed chair from 1934 to 1948, similarly remained a governor until 1951.