But Powell said he’d stay as governor until “the investigation is well and truly over,” and promised “to keep a low profile” and support the new chair.
By Wolf Richter for WOLF STREET.
Powell announced during the press conference following the FOMC meeting that:
- This was his “last Press Conference as chair” of the Federal Reserve Board of Governors; the term expires on May 15, and congratulated Kevin Warsh on being the next chair.
- He would not resign from his position as governor on the Board “for a period of time” until the investigation by the Department of Justice “is well and truly over with transparency and finality” – the same test he’d laid out at the last meeting – adding: “I am encouraged by recent developments and watching the remaining steps in this process carefully.”
His term as governor on the Board doesn’t end until January 2028. If Powell doesn’t resign from the 7-member Board of Governors by May 15, Miran will have to bow out to make room for Warsh so that Warsh can become a governor and chair.
Powell kept his departure date open: “I will leave when I think it’s appropriate to do so.”
At issue is the Fed’s independence, which has come under attack and is now getting fought over in the courts, including the Supreme Court. “I worry these attacks are battering the institution and putting at risk the thing that matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors,” as Powell said that meeting.
Powell formulated his departure test during the FOMC meeting in March: “I have no intention of leaving the Board until “the investigation is well and truly over with transparency and finality.” And he stuck to it at the moment.
When asked if he is confident Warsh would stand up to political pressure, Powell said, “He testified very strongly to that effect in his hearing, and I’ll take him at his word.” And he added, “Every administration looks at our tools and thinks it would be good to re-purpose those to serve other purposes. But that is dragging us into politics and fiscal policy, so we’ve resisted it.”
Highlights of what Powell said about these issues in his prepared remarks:
“This is my last press conference as Chair, and I will close with a few thoughts. First, I want to congratulate Kevin Warsh on his advancement out of the Senate Banking Committee this morning. This is an important step forward, and I wish him well as that process continues.”
“I welcomed the announcement last Friday by the U.S. Attorney for the District of Columbia that she had closed the criminal investigation. She also noted, however, that she would not hesitate to restart the investigation.”
“Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there is a criminal referral from the Fed’s Inspector General. And, absent that referral, if they do appeal the recent court decision, they would not seek as part of that appeal to restart the investigation or send new subpoenas.”
“I have said that I will not leave the Board until this investigation is well and truly over, with transparency and finality, and I stand by that.”
“I am encouraged by recent developments, and I am watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.”
“After my term as Chair ends on May 15, I will continue to serve as a governor for a period of time, to be determined.”
“I plan to keep a low profile as a governor.”
“There is only ever one Chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn, he will be that Chair. Once sworn in as Board Chair, his new colleagues will elect him to chair the FOMC as well.”
“I am confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people.”
Then in the Q&A, Powell responded to some questions:
“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.”
“I want to note this has nothing whatever to do by verbal criticism by elected officials.”
“I worry these attacks are battering the institution and putting at risk the thing that matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy and the people that we serve that they can depend over time on a central bank that operates that way free of political influence.”
“I’m waiting for the investigation to be well and truly over with finality and transparency. And I’m waiting for that. And I will leave when I think it’s appropriate to do so.”
“I’m staying because of the actions that have been taken. I had long planned to be retiring. And the things that have happened really in the last three months left me no choice but to stay until I see them through at least that long.”
“My intention is not to interfere. I was a governor for almost six years. And the tradition is at the Fed that Governors, who understand how difficult the role of Chair is, and as a soon-to-be-former Chair, I do understand how hard it is to get consensus with 19 strong minded people. You work with the Chair. You try to be heard but also collaborate with the Chair and try to support the Chair when you can. When you can’t, you can’t. And I think that is the attitude that people generally take, and that’s the attitude that I’ll take.
“Every new Fed Chair has the same situation, which is you’ve got 18 colleagues on the FMOC. Eleven vote during any year, and your job is to create consensus, talk to them, understand them, be inside their thinking, and be able to pull them together and get consensus and move. And that’s what every Fed Chair has to do. And I think Kevin [Warsh] has the capabilities and skills to be very good at that.”
“That’s something I’d never do, the Shadow Chair thing. I don’t know what the exact specifics of it will be, but I’m going back to being a governor. I respect the role of Chair.”
“I propose to be a very constructive participant in that process really out of respect for the office of the Chair.”
Regime change.
Powell was the architect of mega-QE during the pandemic, whereby the Fed purchased $3 trillion in Treasury securities and MBS in March, April, and May 2020, and then continued buying these securities at a rapid pace, thereby driving down the 10-year Treasury yield below 1% and 30-year fixed mortgage rates below 3%, triggering a massive asset-price explosion, including the home-price explosion from mid-2020 through mid-2022.
Powell was also the architect of the “ample reserves regime,” which the Fed formalized in early 2020 just before the pandemic. The purpose of the regime is a larger balance sheet than the Fed could have if it veered back to the old pre-QE system of supplying liquidity only when demanded.
Warsh has lashed out at these policies for years and wants a smaller balance sheet. He stuck to that even during his confirmation hearings before the Senate Banking Committee. Warsh will have to build a majority among the 12 voting FOMC members to change these policies. And that will not be instant. And any shift in policy is going to be implemented slowly.
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Kudos to Powell for staying on and standing on his principles, even if I think he and the Fed could have have been more aggressive in fighting inflation over the past couple of years.
Principle?
Like a 50 basis emergency rate cut in September 2024, based on zero data, to help sway an election?
“Zero data?” There was lots of data on the labor market suddenly cratering just before the Sep meeting. It was kind of spooky. I talked about it at the time. A month after the meeting, most of this bad data was then upwardly revised, and the labor market looked OK-ish — not spooky anymore. I also talked about that here. The labor market has been strange, and the data has been very volatile with huge revisions in both directions.
Wolf,
Agree; 50BP cut in Sept 2024 looks like big cut in hindsight. But that time labor data was coming very bad. They needed to act. we were 5.25-5.5% range. They brought it down by 75 in Sept and Nov 2024. Dec 2024 cut was premature. By then we all had seen labor market data was blip.
When it came to slowing down QT, Powell moved quickly. Few governors talked about Selling MBS. That never happened.
Same in 2025 too. 50 BP cut was ok. additional 25 in Dec 2025 was again unnecessary.
When it comes to easing, Powell is very impatient. When it comes to Inflation, Powell has all patience in the World. That’s a real problem.
The Fed is simple put
THE GOVERNMENT THEFT DEPT
with continual devaluation of fiat $dollar
99% lose every time
grift goes far and deep
Agree with Sandeep here. If Wall St looks like there’s even a hint of stress, Powell (and previous Fed chiefs) come in their rescue, guns blazing, consequences be damned.
But when it comes to Main St issues like inflation, he has all the caution in the world to wait and see if it’s transitory, double and triple check data, “see through” transient spikes to long term trends, yadda yadda.
He gets some credit for starting QT but even that was too slow, and he ended it long before it had to be. Assets are still spiking upward. Even real estate, while transactions are down, overall prices are stable.
Remember that Powell was Trump’s appointee. By that exceedingly low standard he’s better than the other deranged clowns in his administration, but I’d hardly call him a shining example of excellence. Even his so-called independence: maybe from the govt but we know the Fed’s real masters are Wall St, and that regulatory capture remains alive and well under Powell.
Howdy Folks. Isn’t this over spending costs of a construction project? All this drama over that? Why is it so hard to add and subtract anymore?
You know it’s not about costs overruns. It’s about Trump wanting to lower interest rates and finding a way to get the chair fired before the term is up for not complying. This administration cares zero about costs overruns.
It’s all about keeping grifter game goind
we’re entering final inning
were 99% find out quick and fast they are ….
incomes can’t keep up with sky high cost increases
blame Trump for final inning
blame CARTER, REAGAN, BUSH I, CLINTON, BUSH II, OBAMA++, Trump I, BIDEN ++++
spending fiat $dollars we don’t have(just taking grift out would balance budget)
and then loading up on govt debt(now exponential)
we talk, work in thousands, hundreds
they throw away TRILLIONS
If by “throw away”, you really mean grift right into their own pockets via their LLCs, then yes, you are correct.
55 years after Nixon unchained criminals in banking and finance, it really is amazing to me that inflation isn’t much, much worse and the siphoning real wealth into fewer and fewer hands continues unabated.
For those of us that had to actually read considerable real literature during our youth, it’s pretty clear that we are now somewhere between 1984 and Brave New World. History is pretty clear on how such imbalances end.
Hedge accordingly.
Scott Bessent on Powell:
Treasury Secretary Scott Bessent criticized Jerome Powell for his decision to stay on the Federal Reserve Board after he steps down as the US central bank’s chair, saying it amounts to a break with Fed tradition.
“It’s highly unusual for someone who says he’s an institutionalist and cares about norms at the Fed,” Bessent said on Fox Business Wednesday with regard to Powell. “This is a violation of all Federal Reserve norms.”
Bessent said the move amounted to an “insult” to Warsh and Governors Michelle Bowman and Christopher Waller, who were also picked by Trump, “to think that these other Republican nominees do not care about the institution of the Fed and that he alone can maintain the integrity of the Fed.”
LOL This administration needs to STFU about “Fed tradition.” They ruthlessly and blatantly violated every Fed tradition that ever was.
Howdy Lone Wolf. Who would have ever thought a Tweet could do so much??? Having to pay attention to politics more than ever before in my lifetime sure is fun…..
When politicians talk about “traditions” or “norms,” they’re almost always acting in an intellectually dishonest manner and using it as a weapon against their opponents.
I think the appropriate word is “disingenuous”…such were Bessent’s comments.
Bessent very well knows Powell and FED was and is recklessly attacked in T-2 Administration. For long time he was the Adult in the Trump Room.
It is so unfortunate Bessent is losing his credibility to keep Trump happy.
When he wrote his article in WSJ on criticizing, that was really in depth and very balanced article. That’s kind of Intellect we expect from Treasury Secretary.
Many Wolf Street readers including Wolf disagree on Powell’s Ample Reserve Regime and Excessive QE. He inherited huge balance sheet and he made it gigantic. But he also did 2T QT. We can all call out Powell’s mistakes and wrong policies. But bogus criminal investigations is a true crime.
We all have seen Meme coins and TACO trades. We all know who Real Criminals are.
Exactly, the minute the Fed backstopped the great financial FRAUD of 2008/2009 everyone should have recognized that their credibility was dead.
In an earlier analysis of the Fed balance sheet and treasury obligations etc. Wolf speculated predicted the the Fed’s balance sheet may have a lower limit of 6.6 trillion but certainly could not go below 6 trillion. Well, here we are, back to 6.7 trillion and climbing.
Hedge accordingly.
US 10 Year Treasury US10Y | 9:04 PM EDT
Yield 4.424% up +0.008
Wall Street traders have cooked up a new food-themed acronym for President Donald Trump’s Iran war deadlock – “NACHO” – as the Strait of Hormuz disruption drags on and keeps oil markets on edge.
The label has reportedly emerged in trading circles where skepticism of the president’s ability to reopen the strait, a key global energy trade route, is now such a trend that it merits its own code name.
Bloomberg columnist Javier Blas revealed “NACHO” on Wednesday, citing a trader who told him the acronym stands for: “Not A Chance Hormuz Opens.”
I think citizens should be grateful for public servants like Powell. He shows humility in an era of boastful morons in leadership positions.
Powell made the hard decision to support the 30% inflationary impulse that was clearly engineered around Covid. That inflation helped to reduce the national debt, even though it was very painful for the lower K population.
Seems like today, many think they could do a much better job as Fed leader. Put in that position, very few of us could do that job.
Warsh is not going to make any major changes in spite of his philosophy. He probably already knows that just keeping the ship lighted is about the best he can do.
sarcasm button lights up.
LOL! Halarious, now do Ben “we will never monetize the debt” Bernanke!
I hope your comment is sarcasm.
Inflation is a choice, so when Powell tells people it will be 2% then accepts a 30% inflationary impulse as you say, it’s dishonest. Dishonest leadership is not good leadership.
Warsh was selected by trump for the same reason everybody is selected by trump: Expectations of loyalty and following orders
but he only gets one vote out of 12 on the FOMC so i don’t see how that can change anything
the fed ended 3.5 years of QT in december 2025 and now has started QE
M2: 12/25 through 3/26:
as a simple three-month growth rate, this is 1.49%,
which annualizes to a rate of roughly 5.96%.
M2 growth faster than the real GDP growth will cause CPI to rise
Powell sucks, but if he stays on that means no Miran right?
Yes, if Powell doesn’t bow out by May 15, Miran has to bow out to let Warsh in.
The Fed, Congress, and the WHITEHOUSE have betrayed and continue to betray the average American. I have little hope anything will change, but will be very happy to see Powell leave!
I’m expecting Warsh to be a second Miran. Rate cuts at every meeting. The first time he doesn’t advocate a rate cut is when he gets indicted. If he’s still there when the Dems take over, he’ll flip to being an ultra inflation hawk (likely with an actually high inflation rate to back him up).
Interestingly, Trump has talked like he wants lower rates, yet he nominates one of the more hawkish voices. Or perhaps we are supposed to assume that Warsh is saying the opposite of what he hopes to do ?
I support everything Trump has done domestically and oppose just about everything he has done offshore. He’s a very lucky guy and God oten uses what the world calls a “fool” to accomplish his purpose – and we call that “purpose”, “luck”. So perhaps the Iran mess will turn out ok…or perhaps it will be the debacle it seems to be at present – 9 weeks into.
I also think interest rates are about where they should be or can be given our fiscal situation. Everyone assumes – because “Trump says” he wants rates at 1%. But Trump says a lot of things, often in contradiction. In an age when secrets are impossible maybe thats the best approach.
In the bigger picture, it seems like the Bond market and our ability to continue borrowing huge sums is all that matters. To the extent Iran has a strategy, tipping over the bond market, by tipping over the global economy is it. What matters then in a new FED chair, is: will he be a good steward of the bond market ?
Maybe “steward” is the wrong word. Perhaps “mechanic” is better, a good mechanic who can keep the jalopy running for a while longer.
Jay Powell announced his decision to stay on at the Fed saying I’ve said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that.”
“In terms of when I would leave, I will leave when I think it’s appropriate to do so,” he added. “The things that have happened in the last three months, I think, left me no choice but to stay.”
Mr. Powell concluded that “after my term as chair ends on May 15th, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor.”
The cost overrun investigation is being run by the Fed’s inspector general, who is independent, and Mr. Powell has nothing to do with it.
Mr. Powell’s record as Fed chairman was not a consideration in his decision although under his watch the Consumer Price Index averaged 3.5 percent per year, the worst record in more than 40 years. Cumulatively the CPI rose 32 percent and the real gross domestic product averaged 2.4 percent at an annual rate. Policy under Mr. Powell embraced President climate and DEI agendas.
Treasury Secretary Scott Bessent expressed strong displeasure with Powell by saying “I think it is an insult to Kevin Warsh, Miki Bowman, and Chris Waller to think that these other Republican nominees do not care about the institution of the Fed and that he alone can maintain the integrity of the Fed.”
As it is, Mr. Warsh will take the helm as chairman and make a number of important changes. The Fed’s economic models that are based on the premise that strong growth leads to higher inflation will likely be reviewed.
Mr. Warsh apparently believes low tax rates and deregulation result in faster productivity and lower unit labor costs will have a disinflationary impact. His impulse will be to refocus the central bank on monetary policy, and leaving fiscal and debt management policies to the Treasury.
Under the Fed’s recent leadership the Fed in some respects acted as a central planning agency. Mr. Warsh wants the Fed to earn its independence by staying out of politics, and sticking to better control of the money supply, and maintaining a strong and stable dollar. The cacophony of yapping by various Fed officials along with forward guidance may well come to an end.
The chairman’s job at the central bank is a very powerful job. Whether, under the circumstances Mr. Warsh sees fit to give Mr. Powell a parking spot remains to be seen.
Powell would have resigned from the Board by May 15 with a handshake and a smile, like the others before him, had the goofballs that run the DOJ and the FHFA not tried to use the court system to attack the Fed from every angle. All it did was produce a huge mess and possibly delay Powell’s departure. Bessent would have never done that. He attacked Powell rightfully verbally and in print, but didn’t use the court system to attack the Fed. He almost came to blows with Pulte (head of FHFA), who did use the court system to attack the Fed.