By staying on the Fed’s board, Jerome Powell could be doing incoming Chairman Kevin Warsh a huge favor |
By staying on the Fed’s board, Jerome Powell could be doing incoming Chairman Kevin Warsh a huge favor
Jerome Powell’s continued presence on the Federal Reserve’s board of governors after his term as chairman ends might be awkward for his replacement, but could also be a big favor for Kevin Warsh.
On Wednesday, Powell diverged from long-standing tradition and announced he will remain on the board until the investigation into renovation of the Fed’s headquarters is truly complete. That came after the Justice Department dropped its investigation but left the door open to a renewed probe.
“My concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without considering political factors,” Powell told reporters. “I worry that these attacks are battering the institution.”
He dismissed the notion he would be a “shadow” Fed chair and instead insisted that he would keep a low profile and not interfere with Warsh’s leadership. When asked how he would keep a “low profile” by reporters, he even made light of the situation and ducked below the podium.
Such a situation hasn’t happened since 1948, when Marriner Eccles resigned as chairman and remained on the board until 1951. Powell’s term as chairman ends May 15 but his term as a governor ends Jan. 2028.
While he may not linger on the board all the way to 2028, Powell’s break from the norm could be useful for Warsh, who faces a balancing act of a president demanding rate cuts and the reality of elevated inflation due in part to Donald Trump’s own tariffs and the war on Iran.
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