{"id":615991,"date":"2026-04-30T21:18:07","date_gmt":"2026-04-30T21:18:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/615991\/"},"modified":"2026-04-30T21:18:07","modified_gmt":"2026-04-30T21:18:07","slug":"behind-powells-high-stakes-decision-to-stay-at-the-fed","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/615991\/","title":{"rendered":"Behind Powell\u2019s High-Stakes Decision to Stay at the Fed"},"content":{"rendered":"

Over the past year, Jerome H. Powell has frequently said that the Federal Reserve faced \u201cno risk-free paths<\/a>\u201d as it confronted a series of economic shocks that simultaneously lifted inflation while denting growth.<\/p>\n

The same could be said for his momentous decision<\/a> to stay on at the Fed as a governor after his term as Fed chair ends May 15.<\/p>\n

In choosing to stay, Mr. Powell used the one tool of leverage he had left to push back on an administration that has aggressively attacked<\/a> the central bank for its refusal to bend to the president\u2019s demands for lower interest rates. Unless another Fed governor departs, President Trump will not have another vacancy to fill until Mr. Powell\u2019s term ends in January 2028, stymieing the president\u2019s plans to get more of his supporters on the powerful board of governors.<\/p>\n

The move, which Mr. Powell announced on Wednesday at his final news conference after eight years as chair<\/a>, drew an immediate rebuke from the administration. Mr. Trump quipped that Mr. Powell was staying because \u201che can\u2019t get a job anywhere else \u2014 nobody wants him.\u201d Scott Bessent, the Treasury secretary, called Mr. Powell\u2019s decision a \u201cviolation of all Federal Reserve norms.\u201d<\/p>\n

On Thursday, Mr. Trump seemed to soften his approach, saying during remarks at the White House that he did not care if Mr. Powell stayed on and only was concerned about getting his Mr. Warsh into the top job.<\/p>\n

The question now is whether Mr. Powell\u2019s continued presence will further inflame tensions between the administration and the central bank, leading to even more intense attacks that will keep the institution on the defensive. Weeks before Mr. Powell announced his decision, Mr. Trump threatened to fire him<\/a> if he did not resign after his term as chair ended.<\/p>\n

\u201cThis could still go sideways, and if it does, some people will point to Powell staying as a provocation,\u201d said Claudia Sahm, a former forecaster at the Fed who is now the chief economist at New Century Advisors. \u201cStay or go, there are risks on either side of this.\u201d<\/p>\n

Mr. Powell made clear on Wednesday that he wanted nothing more than to leave the Fed. Yet he said he had \u201cno choice\u201d but to stay and guard against further encroachments on the institution where he has served for nearly 14 years, first as a governor and then as chair. The last time a chair whose term had expired stayed on as a governor was in 1948.<\/p>\n

\u201cI\u2019m literally staying because of the actions that have been taken,\u201d Mr. Powell said when asked about whether his decision would be viewed as a political act. \u201cI have long planned to be retiring.\u201d<\/p>\n

The decision had nothing to do with Kevin M. Warsh<\/a>, Mr. Trump\u2019s pick to replace him as chair, Mr. Powell stressed on Wednesday.<\/p>\n

He said he took Mr. Warsh at his word that he would stand up to political pressure from the president. Mr. Powell also vowed to keep a \u201clow profile as a governor,\u201d despite retaining a vote on decisions around rates and other policies.<\/p>\n

William Dudley, who previously was the president of the Federal Reserve Bank of New York, said he expected Mr. Powell to stay relatively quiet and embrace a \u201cone man, one vote\u201d approach.<\/p>\n

Mr. Powell spent much of his news conference explaining that his decision to stay rested on a belief that the central bank\u2019s independence was fundamentally \u201cat risk\u201d amid a litany of legal threats that were far from over.<\/p>\n

\u201cThese legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of additional such actions,\u201d he said. \u201cI worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.\u201d<\/p>\n

Top of mind for Mr. Powell is a criminal investigation that the Justice Department began against the Fed regarding renovations to its headquarters in Washington and whether he lied to Congress about the plans. Federal prosecutors dropped<\/a> the inquiry on Friday, but maintained that they could reopen it at any point. Jeanine Pirro, the U.S. attorney for the District of Columbia, said on Thursday that there was \u201cno question\u201d the Justice Department would appeal a federal judge\u2019s recent ruling that quashed subpoenas<\/a> issued to the central bank. For now, the Fed\u2019s inspector general is looking into the renovation, an inquest that Mr. Powell requested in July.<\/p>\n

\u201cYou\u2019ve got billions of dollars in cost overruns on a very small project,\u201d she said, adding that prosecutors would await the \u201cdecision\u201d by the Fed\u2019s internal watchdog and \u201cbased upon that decision we will then decide what we are going to do.\u201d<\/p>\n

Mr. Powell has long stipulated that he would not leave the Fed until the Justice Department\u2019s investigation was \u201cwell and truly over, with finality and transparency.\u201d But a mounting concern is whether Mr. Trump will now use the allegations leveled in the investigation to try to fire Mr. Powell, having already accused him of \u201cincompetence\u201d and questioned whether he committed fraud.<\/p>\n

\u201cThere\u2019s definitely a cost-benefit analysis one would think Powell engaged in, and the cost of staying is that it greatly increases the likelihood that there will be a for-cause removal case against him involving the renovations, which would be a novel litigation,\u201d said Lev Menand, an associate professor at Columbia Law School.<\/p>\n

A president can remove a Fed official only for cause, which legal experts interpret to mean gross misconduct or a dereliction of duty. The issue is being debated<\/a> by the Supreme Court after the president\u2019s attempt to fire Lisa D. Cook, a governor, in August.<\/p>\n

Joseph Gagnon, a former senior member of the Fed staff who is now at the Peterson Institute for International Economics, said it was crucial for Ms. Cook to win that case. \u201cIf they let Trump fire governors at will, then there\u2019s no more independent monetary policy,\u201d he said.<\/p>\n

If Mr. Trump or the Justice Department pursues any additional legal actions, \u201cbeing on the inside is always better than being on the outside,\u201d Scott Alvarez, who previously served as the Fed\u2019s general counsel, said of Mr. Powell\u2019s decision to stay.<\/p>\n

Graham Steele, a longtime financial regulation lawyer and a former Treasury Department official, noted that there would be \u201cstrategic\u201d advantages in doing so, such as \u201cphysical proximity, access to information and the institutional halo effect that come from being a sitting governor.\u201d<\/p>\n

For the time being, Mr. Powell\u2019s continued presence at an institution that has gone through so much tumult in the past year and is now on the cusp of a major leadership transition is \u201csymbolically really important,\u201d said Jon Faust, a fellow at the Center for Financial Economics at Johns Hopkins University and a former senior adviser to the outgoing chair.<\/p>\n

What perhaps will matter even more is when Mr. Powell decides to leave, Ms. Sahm said.<\/p>\n

\u201cIt will mean so much when he says, \u2018I\u2019m ready to retire,\u2019 because that will be a sign from someone who cares deeply about the institution that it\u2019s going to be OK.\u201d<\/p>\n

\u2014 Tony Romm contributed reporting.<\/p>\n","protected":false},"excerpt":{"rendered":"Over the past year, Jerome H. Powell has frequently said that the Federal Reserve faced \u201cno risk-free paths\u201d…\n","protected":false},"author":2,"featured_media":615992,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[28,5648,8877,177016,261284,261285,14732,177015,3479,106855,63852,241068],"class_list":["post-615991","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-donald-j","tag-federal-reserve-system","tag-fees-and-rates","tag-jerome-h","tag-kevin-m","tag-powell","tag-prices-fares","tag-trump","tag-united-states-economy","tag-united-states-politics-and-government","tag-warsh"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/615991","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=615991"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/615991\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/615992"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=615991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=615991"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=615991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}