Federal Reserve Chair Powell's Future

(Reuters) – On Thursday, Federal Reserve Chair Jerome Powell declined to state whether he would stay on as a board member after his chief term ends in May 2026.

Asked at an event in Dallas if he would be the first Fed chair in over 70 years to remain on the board after stepping down as leader, Powell only confirmed his commitment to serve out his chair term.

> "I'll certainly serve to the end … of my chair term," Powell remarked. "And that's really all I've decided, and all I'm thinking about."

Powell's term as a Board of Governors member lasts until January 2028. The last former Fed chair to remain on the board after their leadership was Marriner Eccles, who left his position in January 1948 but continued until July 1951.

This question arose following a suggestion from Scott Bessent, a candidate for a top economic role in Donald Trump's new administration, proposing that the next president nominate and confirm a successor well before Powell's term ends.

Bessent mentioned this strategy could weaken Powell's authority while positioning a pre-approved successor for monetary policies more in line with Trump's interests:
> "You could do the earliest Fed nomination and create a shadow Fed chair," Bessent said. "And based on the concept of forward guidance, no one is really going to care what Jerome Powell has to say anymore."

Later, he retracted this idea, stating it was no longer worth pursuing. However, Trump's history of challenging norms and his criticisms of Powell have raised concerns about preserving the Fed's independence once Trump is back in office in January.

Typically, presidents nominate successors or renominate the current chair before the incumbent's term ends. This process generally occurs within three to four months, allowing time for Senate confirmation but not for a nominee to usurp the current chair's authority. For instance, Trump nominated Powell in November 2017, three months before Janet Yellen's term ended. Similarly, President Biden renominated Powell in November 2021.

The next potential board seat Trump could fill is held by Adriana Kugler, who was appointed by Biden and began her tenure at the Fed in September 2023, with her term expiring in January 2026.

In a speech in Uruguay, Kugler emphasized the importance of Fed independence, stating:
> "It has been widely recognized – and is a finding of economic research – that central bank independence is fundamental to achieving good policy and good economic outcomes."

Upon being asked about Kugler's remarks, Powell supported her view, asserting that Fed independence is widely accepted by both parties in Congress.