![\"Jerome](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/05\/Why_Jerome_Powell_Decided_to_Stay_at_the_Fed_1777806075630_1777806092668.jpg\" "\\"Jerome")
Jerome Powell after his final news conference as Fed chair last Wednesday (Shutterstock)<\/p>\nThe Federal Reserve was breaking all the rules.<\/p>\n
Jerome Powell after his final news conference as Fed chair last Wednesday (Shutterstock)<\/p>\n
It was April 2020, with pandemic lockdowns producing some of the scariest moments for the U.S. economy in decades. The central bank had just rolled out plans to do things it would never ordinarily do: lending to midsize businesses, purchasing junk bonds and hoovering up Treasury securities at a pace it had never attempted. Fed Chair Jerome Powell was unapologetic.<\/p>\n
\u201cNone of us has the luxury of choosing our challenges,\u201d he said in a virtual speech. \u201cFate and history provide them for us. Our job is to meet the tests we are presented.\u201d<\/p>\n
Six years later, the same sentiment explains a more personal reckoning: his decision to remain on the Fed\u2019s board<\/a> after his term as chair ends May 15\u2014the first chair to do so since Marriner Eccles in 1948.<\/p>\n Powell had long been counting down the days to retirement. By April, he had concluded reluctantly that the days were no longer his to count. Powell\u2019s decision was one he didn\u2019t want to make and hoped he could avoid, according to interviews with current and former Fed officials and others who have worked closely with him.<\/p>\n At his final news conference last week, Powell said President Trump\u2019s legal challenges had crossed a line that threatened to change how the Fed operates. \u201cThe things that have happened, really in the last three months, have left me no choice,\u201d he said.<\/p>\n Staying on the board was his bid to ensure the central bank would continue to be able to conduct monetary policy without political interference. The legal actions were \u201cunprecedented in our 113-year history,\u201d Powell said. \u201cI worry that these attacks are battering the institution.\u201d<\/p>\n The January decision to pursue a Justice Department criminal investigation, in the view of people who know Powell well, reflected a fundamental misreading of the Fed chair\u2014one they described as alarming, strategically inept and ultimately revealing about the administration\u2019s intentions. Rather than push him out the door, the move reinforced Powell\u2019s sense of responsibility to the institution and helped produce the decision he had hoped to avoid.<\/p>\n The probe wasn\u2019t the only concern. Talk among the president\u2019s allies about firing reserve bank presidents<\/a>, who since 1935 have served as a structural check on White House influence over monetary policy, deepened the worry. The tactics might change, the thinking went, but the goal wouldn\u2019t: seizing control of the Fed\u2019s decentralized rate-setting committee outside of the legally established appointment process, in which a board seat opens every two years.<\/p>\n What the probe signaled about Trump\u2019s willingness to pursue those aims, these people said, was the reason that staying was on the table at all. Without it, Powell wouldn\u2019t have seriously considered remaining once Trump nominated former Fed governor Kevin Warsh to succeed him as chair.<\/p>\n Powell\u2019s decision drew swift criticism from Trump allies. Treasury Secretary Scott Bessent called it \u201ca violation of all Federal Reserve norms\u201d and said Powell was acting as if \u201che alone can maintain the integrity of the Fed,\u201d adding that it was insulting to Warsh.<\/p>\n Larry Kudlow, the former Trump economic adviser who used to meet with the Fed leader, said the decision reflected poorly on Powell. \u201cJay Powell\u2019s not the martyr he thinks he is,\u201d Kudlow said on his Fox Business program. \u201cHe has bad manners.\u201d<\/p>\n Trump said Thursday that he wasn\u2019t bothered by Powell\u2019s decision. \u201cI don\u2019t care,\u201d he told reporters.<\/p>\n Powell said he wasn\u2019t staying to second-guess Warsh and that he would keep a low profile. \u201cI\u2019m not looking to be a high-profile dissident, or anything like that,\u201d he said.<\/p>\n The pressure had been building for months. Verbal criticism from the White House turned to legal confrontation in August, when the Trump administration sought to fire Fed governor Lisa Cook in a case she has challenged. It is now pending at the Supreme Court<\/a>.<\/p>\n Then in January, the Justice Department opened a criminal investigation of Powell\u2019s oversight of building renovations. Powell challenged the effort in a behind-closed-doors legal battle, and a federal judge ruled the subpoenas improper. Lawmakers in both parties called the matter unworthy of criminal scrutiny. The blowback froze Warsh\u2019s path through the Senate until April 24, when the U.S. attorney\u2019s office announced the probe would be halted<\/a>, just in time for the Senate to confirm Warsh on schedule.<\/p>\n Current and former Fed officials who have been appointed by presidents from both parties said they hoped they would have made the same decision Powell made if they had been in his position.<\/p>\n \u201cJay was in a really difficult situation,\u201d said Loretta Mester, who as president of the Cleveland Fed from 2014 to 2024 served alongside Powell for a decade. \u201cI think he did what he had to do given the conditions.\u201d<\/p>\n The probe was resolved in a way that satisfied the key Senate Republican, Thom Tillis of North Carolina. With his one-man blockade ended, Warsh\u2019s confirmation advanced through the Senate Banking Committee on a party-line vote<\/a> last week.<\/p>\n Hours later, Powell said the resolution hadn\u2019t met the standard he had publicly set weeks earlier, when he said it needed to end \u201cwith transparency and finality.\u201d<\/p>\n The Justice Department offered private assurances that it would pursue a criminal referral only if the Fed\u2019s inspector general\u2014whose audit Powell had requested last July\u2014found wrongdoing. The department also indicated that its forthcoming appeal of the subpoena ruling<\/a> was about preventing adverse case law for the government, not about reopening the probe against him. But the U.S. attorney\u2019s office didn\u2019t issue a public exoneration, and officials suggested they could restart the investigation at any time.<\/p>\n Powell hasn\u2019t said how long he plans to stay. His term as a governor ends in early 2028. Some of those who know him say he could be there a while because they have concluded the administration can\u2019t be trusted to change its behavior.<\/p>\n \u201cGiven that Powell is looking for credible assurances from an administration that has shown repeatedly that it cannot be trusted to restrain its vindictive urges, I suspect Powell\u2019s tenure may continue for a considerable period,\u201d said Jon Faust, who was a senior adviser to Powell from 2018 to 2024.<\/p>\n Staying carries its own risks for the institution Powell is trying to defend. Every vote he casts as a governor will be parsed for political meaning. Powell\u2019s mere presence gives the administration a target it wouldn\u2019t otherwise have and complicates Warsh\u2019s task of taking command of an institution his predecessor had run for eight years.<\/p>\n Warsh has laid out an ambitious agenda for the Fed<\/a> that promises a rethink of how the Fed operates, manages its relationship with the Treasury Department and communicates with the public. Even without giving speeches or interviews, Powell will introduce an unfamiliar dynamic by sitting in the room as those debates unfold.<\/p>\n \u201cHe doesn\u2019t want to be viewed as someone who is obstructing a new chair who\u2019s coming in,\u201d said Mester, the former Cleveland Fed president. \u201cAnd if he was ever in a position where he felt like he had to dissent, then that\u2019s going to be even more scrutiny: \u2018Oh, the Fed\u2019s acting political.\u2019\u201d<\/p>\n That Powell is willing to bear those costs reflects both how he reads the threat and how he reads his obligations, said former Philadelphia Fed President Patrick Harker. \u201cHe is doing what he has done from the start. He is absorbing pressure that the institution would otherwise have to absorb without him,\u201d he wrote in an essay Saturday<\/a>.<\/p>\n \u201cHe had every right to retire,\u201d Harker added. \u201cHe earned it. He chose not to.\u201d<\/p>\n