After eight years at the helm of the Federal Reserve, Friday marks Jerome Powell’s final day as the central bank’s chair.
He is being succeeded by Kevin Warsh, a financier and attorney who previously served as a Federal Reserve governor from 2006 until 2011.
On Wednesday, the Senate confirmed Warsh as the 17th chair of the central bank in a 54-45 vote—– the narrowest margin since the current approval process was put in place in 1977.
But Powell, whose 14-year term as a Federal Reserve governor expires in 2028, will not be leaving the Board of Governors, as is customary.
Instead, he said he plans to stay on as a governor until a Justice Department probe into his handling of the central bank’s headquarters renovation “well and truly” concludes.
Powell’s eight years as Fed chair
Picked by President Donald Trump to lead the Federal Reserve in 2017 and then reappointed by former President Joe Biden for a second, four-year term, Powell guided the policymakers’ response to the COVID-19 pandemic and the highest annual inflation in four decades, which peaked at 9.1% in June 2022.
He is widely credited with the Fed cutting interest rates to near zero at two emergency Federal Open Market Committee meetings to cushion the economy at the start of the pandemic. Meanwhile, his critics have pointed to his continued expansion of the Fed’s balance sheet of government bonds and mortgage-backed securities, as well as his slow response to rising inflation — at first calling it “transitory” in 2021.
“That’s the big mistake he’s known for. He regrets it, and he’s corrected for it,” Richard Fisher, former Dallas Fed president, said about Powell’s “transitory” remarks in an interview with CNBC on Thursday.
However, Fisher largely praised Powell’s tenure as chair, citing “how he has fended off the intrusion of the political authorities into the business of the Fed.”
Throughout much of his time at the head of the central bank, Trump has repeatedly criticized Powell for not reducing interest rates.
“Jerome ‘Too Late’ Powell again refused to cut interest rates, even though he has absolutely no reason to keep them so high,” Trump wrote in January on Truth Social. “He is hurting our Country, and its National Security.”
Over the years, Powell seemed to shrug off Trump’s criticism, but in January he released a video statement saying that he was being investigated over the renovations of the Federal Reserve’s headquarters in Washington and contending that the independence of the central bank was at stake.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said in the recorded message.
Following the revelation of the probe, Sen. Thom Tillis, R-N.C., vowed to block any nominations to the Federal Reserve, including Warsh’s, until the investigation ended.
Tillis ultimately voted to approve Warsh last month after U.S. Attorney for the District of Columbia Jeanine Pirro said her office was dropping its probe and that the Office of the Inspector General for the Federal Reserve would be conducting its own inquiry.
However, Pirro added in her social media post that she would “not hesitate to restart a criminal investigation should the facts warrant doing so.”
The following week, Powell said during his final news conference as chair that he would remain on as a Fed governor until the Justice Department’s criminal probe into the central bank’s renovations is “well and truly over.”
At the time, he also noted that the pending Supreme Court decision over the Trump administration’s efforts to oust Federal Reserve Governor Lisa Cook was not factoring in his timeline for staying on the Board of Governors. The nation’s highest court has allowed Cook to remain in her role while the justices consider her case.
Powell’s remarks came as the Federal Open Market Committee voted for the third time this year to hold interest rates steady, citing the conflict in the Middle East as contributing to “a high level of uncertainty about the economic outlook.”
The 12 voting members of the committee –– including the seven members of the Federal Reserve Board of Governors, the president of the Federal Reserve Bank of New York and four Reserve Bank presidents who rotate in for one-year slots — each vote on adjustments to the federal funds rate. The group meets several times per year to discuss monetary policy.
The key benchmark rate, which banks charge each other for overnight loans, often influences long-term borrowing rates for Americans taking out mortgages and auto financing, as well as the interest rates for credit cards and student loans.