Why Jerome Powell Staying At The Fed Could Matter More Than Who Replaces Him

• U.S. President Donald Trump’s nominee Kevin Warsh is widely expected to succeed Powell as the next chair after his term expires on May 15. 
• The Future Fund LLC Managing Partner, Gary Black, has said that Powell's staying on will make him “a strong voice in standing up” to maintain the Fed’s independence. 
• Justin Wolfers, Professor of Economics and Public Policy at the University of Michigan, said that Powell remaining a governor would give him “leverage.”

Federal Reserve Chair Jerome Powell will remain on the Board of Governors for the foreseeable future, even after his term as chair ends on May 15, marking a departure from the long-standing tradition of stepping down from the Board when a chair's term ends.

Wall Street analysts believe the move will help preserve the Fed’s institutional independence, even as U.S. President Donald Trump’s nominee, Kevin Warsh, is widely expected to succeed Powell as the next chair.

Warsh on Wednesday cleared a key hurdle after the Senate Banking Committee voted to advance his nomination to the key position in the central bank.

Wall Street’s Stance On Powell’s Decision

On Sunday, Gary Black, The Future Fund LLC Managing Partner, reshared a post on X that discussed Powell’s decision to remain on the Federal Reserve’s Board of Governors its implications, saying, “This is the likely reason Powell decided to stay on as a Fed governor for two more years and why he will continue to be a strong voice in standing up to Trump’s meddling. destructive attempts to end Fed independence.”

The original post, from CryptoQuant analyst Kerem Pirim, argued that Powell’s decision “could carry very big implications” as staying on would likely be an institutional choice in modern Fed history, potentially shaping the balance between the central bank’s independence and political influence. However, a decision to leave may have made the Fed more vulnerable to “reshaping” along political lines.

Justin Wolfers, Professor of Economics and Public Policy at the University of Michigan, said in an interview that Powell’s decision to stay on was his final “card” left to use to defend the rights of the American people. “Powell’s term as chair may be ending, but his ability to remain a governor still gives him leverage. That matters because process is protection against capture,” he added in a post on X.

Powell’s Move

Powell’s decision to stay on the Board temporarily blocks Trump from gaining a majority. Other appointees of the president on the seven-member Fed board include Christopher Waller and Michelle Bowman. Meanwhile, Fed Governor Stephen Miran, who has consistently called for rate cuts in line with Trump, will likely have to step down from his position to make room for Warsh.

In its latest policy meeting, the Federal Reserve held its benchmark interest rates steady at 3.50% - 3.75% amid high inflation and rising energy prices from the war in the Middle East.

Meanwhile, U.S. equities were mixed in Sunday’s overnight trading session. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.18%; the Invesco QQQ Trust ETF (QQQ) rose 0.39%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) edged lower by 0.05%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘extremely bullish’ territory.

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