Powell defies Trump: announces he will stay on as Fed governor despite his term as chairman expiring on May 15

In a surprise move, Jerome Powell announced that he is leaving the Federal Reserve despite the fact that his term as chairman expires on May 15. The Fed leader announced Wednesday that he will remain at the central bank as governor once he leaves his current post, in a decision that breaks with decades of tradition and sets the stage for a new showdown with President Donald Trump.

"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," Powell said at a news conference. The governor's position would allow him to remain at the Fed until January 2028.

According to him, the decision he made, surprising to many experts, is due to legal threats against him and the Fed itself.

"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 said. He added: “I plan to keep a low profile as a governor.”

A broken tradition

Presidents of the Fed typically leave office at the end of their four-year term unless re-elected by the White House. The last time a president stayed beyond the end of his term was in 1948, when Marriner Eccles continued as governor for three years. For Powell, however, the current moment of tension between himself, Trump and the White House justifies breaking with that precedent.

The decision comes amid a lobbying campaign by the Trump administration, which for months has been demanding that the central bank lower interest rates. The Justice Department went so far as to open a criminal investigation into the renovations at the Fed's Washington headquarters, questioning whether Powell had lied to Congress. Although the Justice Department announced Friday that it was dropping the investigation, Powell made clear Wednesday that wasn't good enough for him.

"I’m waiting for that. And I will leave when I think it’s appropriate to do so," the still Fed leader said.

Conflict in the offing

President Trump has vowed to fire Powell if he does not resign when his term as chairman expires. However, the law states that a president can only remove a Fed official if there is "cause" that actually warrants it, meaning the White House would have to find Powell committing serious misconduct or failing to perform his duties. Trump has tried to build that argument by pointing to costly renovations at the central bank's headquarters as evidence of "incompetence."

For now, the nomination of Trump's hand-picked successor, Kevin Warsh, is moving forward in the Senate after weeks of deadlock. Republican Sen. Thom Tillis, who had vowed to hold up any nominee for the duration of the investigation, lifted his veto Sunday after receiving assurances that legal threats against Powell had ended. On Wednesday, he voted to advance Warsh's nomination to a full Senate vote.

But with Powell determined to stay and Trump determined to get him out, the tension evidently continues and a new conflict is about to erupt.