A high-stakes conflict between outgoing Federal Reserve Chair Jerome Powell and former president Donald Trump escalated dramatically on Wednesday, after Powell announced he would retain his seat on the central bank’s board of governors following the end of his term as chair — drawing a fresh verbal assault from Trump.
Powell confirmed that while his four-year term leading the Fed concludes on May 15, he will exercise his statutory right to remain on the board of governors for a yet-undetermined period. The move comes as Powell has openly voiced concerns about protecting the Fed’s long-standing institutional independence from unprecedented political pressure from the Trump administration.
In a press briefing following the Fed’s latest monetary policy meeting, Powell told reporters, “I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.”
Powell has drawn Trump’s anger for months over his refusal to hastily cut interest rates as the president demanded, and Trump has repeatedly pushed for Powell to step down entirely from the central bank. Shortly after Powell’s announcement Wednesday, Trump lashed out in a post on his personal social media platform: “Jerome ‘Too Late’ Powell wants to stay at the Fed because he can’t get a job anywhere else — Nobody wants him.”
While it is unusual for a former Fed chair to remain on the board after leaving the top post, it is not without precedent. Powell, whose current term as a board governor runs through 2028, has pledged to maintain a low profile under Trump’s nominee for incoming chair, Kevin Warsh. Still, Treasury Secretary Scott Bessent condemned the decision in an interview with Fox Business, calling it a “violation” of long-standing Fed norms and “an insult” to Warsh.
The clash unfolds against a backdrop of multiple escalating legal and political attacks on Fed leadership from the Trump administration, which returned to power last year. Trump has repeatedly criticized Powell for moving too slowly on aggressive interest rate cuts — a policy that would stimulate near-term economic growth but carries significant risk of reigniting inflation. The administration has also attempted to oust sitting Fed governor Lisa Cook over unproven mortgage fraud allegations, a case that is currently pending before the U.S. Supreme Court.
Additionally, the Department of Justice launched a criminal investigation into Powell and the Fed over reported cost overruns on a facility renovation project, a step Powell has characterized as a deliberate tactic to undermine the central bank’s independence. While DOJ has paused the probe for the time being, Powell said he is encouraged by recent developments but will continue monitoring the case. He reiterated Wednesday that he will not leave the Fed until the investigation is “well and truly over,” reaffirming the critical need for an independent central bank free from political interference. He also extended congratulations to Warsh for clearing a key procedural hurdle in what has been a contentious confirmation process.
Powell’s announcement came shortly after the Fed concluded a deeply divided monetary policy meeting, where voting members opted to hold interest rates steady for the third consecutive meeting. The decision came amid widespread economic uncertainty tied to ongoing conflict in the Middle East, which has driven up global energy prices. The Fed kept its benchmark interest rate range unchanged at 3.50 percent to 3.75 percent, noting “inflation is elevated, in part reflecting the recent increase in global energy prices.”
The meeting produced the highest number of dissenting votes since 1992, highlighting deep internal divisions among Fed policymakers. Four of the 12 voting members opposed the final outcome: Governor Stephen Miran pushed for an immediate quarter-point rate cut, while three regional Fed presidents — Beth Hammack, Neel Kashkari and Lorie Logan — supported the pause in rate movement but rejected the statement’s signaling of future inclination toward rate cuts. ING analysts James Knightley and Padhraic Garvey noted that the split points to a contentious debate over future rate policy at Warsh’s first meeting as chair, scheduled for June.
The Fed has been gradually moving toward rate reductions since late last year, but the outbreak of conflict between the U.S.-Israel coalition and Iran has sent energy prices soaring and disrupted global supply chains, leading analysts to warn that persistent inflation could even force policymakers to reverse course and consider rate hikes in coming months.
Earlier on Wednesday, the Senate Banking Committee voted to advance Warsh’s nomination to the full Senate for confirmation, bringing him one step closer to taking over the top Fed post. But Democratic critics have warned that the nomination is part of a broader power grab by Trump to control independent monetary policy. Senator Elizabeth Warren charged that confirming Warsh would advance Trump’s “attempt to seize control of the Fed,” while Senator Raphael Warnock argued the nomination has been tainted by “persistent threats” from the White House.
Even some Republicans initially pushed back on the nomination: Senator Thom Tillis initially pledged to block Warsh’s confirmation, but reversed his position after the Justice Department paused its probe into Powell. When asked whether he believed Warsh would push back against political pressure from the White House, Powell told reporters: “He testified very strongly to that effect in his hearing, and I’ll take him at his word.”