Jerome Powell's tenure as Federal Reserve chair ends May 15, and a news conference Wednesday could finally clarify what comes next.
The Fed meets this week for a regular policy session, and afterward Powell is expected to indicate whether he will remain on the board of governors despite stepping down as chair. Governors serve separate terms from the chair position. Powell's governor term runs until January 2028, and he has signaled he could stay on. If he did, it would be the first time a former Fed chair remained on the board since 1948.
The decision carries real consequences for the Trump administration. If Powell stays, he would prevent Trump from appointing a replacement to fill his board seat, leaving the president with three of seven picks on the Fed's governing body instead of a potential fourth. Some analysts have described the scenario as a "two Popes" problem, with both a chair and a former chair sitting on the same board, potentially deepening divisions among policymakers.
On the same afternoon Powell speaks, the Senate Banking Committee is expected to vote on whether to advance Kevin Warsh, Trump's nominee to lead the Fed, to a full Senate confirmation vote. Warsh's path to that vote was cleared Sunday when Sen. Thom Tillis, a North Carolina Republican, reversed his earlier opposition. Tillis had said he would block the nomination until the Justice Department dropped its investigation into Powell. On Friday, U.S. Attorney for the District of Columbia Jeanine Pirro announced she was closing that inquiry, though she left open the possibility of reopening it if "the facts warrant doing so."
Powell had previously said in March that he would not leave the Fed's board until the investigation was resolved "with transparency and finality." The Justice Department has also said it would appeal a court ruling that threw out subpoenas it had issued as part of the probe, though Tillis said he was assured the appeal was intended only to challenge the legal principle behind the ruling rather than to pursue Powell directly.
On interest rates, the transition may not produce an immediate change in direction. Powell has generally favored reducing rates and would likely continue pushing in that direction once inflation pressures from the Iran war's effect on gas prices ease. Warsh argued for rate cuts last year but is seen as unlikely to move quickly, given that most Fed policymakers have indicated they want to wait and assess the war's broader economic impact before acting.
The confirmation vote and Powell's public comments Wednesday afternoon will be the first concrete signals of how the Fed's leadership structure will look once the calendar turns to mid-May.
