US Federal Reserve chief Jerome Powell on Wednesday said he will remain at the central bank as governor after his leadership term expires next month.
While Mr Powell’s chairmanship ends on May 15, his separate term as one of seven governors on the Federal Reserve board does not expire until 2028.
The decision comes a week after the Justice Department announced it is dropping its criminal investigation into Mr Powell over testimony that he provided to Congress on cost overruns for the multibillion-dollar renovation project at the Fed's headquarters in Washington. Mr Powell said the investigation was a pretext to coerce the Fed into lowering interest rates.
"These legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of additional such actions. I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public," he told reporters.
Mr Powell said that while he welcomed the Justice Department’s decision to drop the criminal investigation, he will remain at the Fed “for a period of time to be determined” until the investigation is “well and truly over with transparency and finality".
The investigation into Mr Powell was a key sticking point in the confirmation process of Kevin Warsh, Mr Trump's pick to take over the mantle at the Fed. Mr Warsh, a former Fed governor, cleared a key hurdle on Wednesday after the Senate banking committee voted 13-11 to advance his nomination, which will now come before the Republican-controlled Senate for a final confirmation vote.
Mr Powell said he intends to keep a "low profile" and vowed to not be a “shadow chair”, while also congratulating Mr Warsh.
Mr Powell has faced repeated attacks during Mr Trump’s second administration for not lowering interest rates at the scale and speed the President has demanded. Mr Trump has made repeated attempts to exert greater influence over the Fed’s rate-setting committee.
"He [Mr Powell] truly did an eloquent job describing the importance of the Federal Reserve and all central banks, and I think that message should be read loud and clear,” said Art Hogan, chief market strategist at B Riley Wealth.
The Fed chair steers the Federal Open Market Committee, which is comprised of their six other Fed governors, the New York Fed president and five regional Fed presidents who serve rotating one-year terms. Seven others take part as observers.
Wednesday's meeting underscored the division within the Fed. The latest decision received four dissents – one on the decision to hold rates steady and three on the statement's so-called easing bias.
"It’s important to emphasise that these dissents are over language, not the rate decision itself. However, they underscore the divisions within the Fed that Kevin Warsh will soon inherit," said Bernard Yaros, lead US economist at Oxford Economics.
For now, Mr Powell’s decision denies Mr Trump the vacancy to appoint a new member and have a working majority at the Federal Reserve board.
Mr Trump has sought several avenues to exert more influence in how the FOMC sets US interest rates, which he has repeatedly suggested should be the "lowest in the world".
After the surprise resignation of Fed governor Adriana Kugler, who was appointed by former president Joe Biden, Mr Trump nominated key economic ally Stephen Miran to serve on the board.
The Supreme Court is also expected to rule on whether Mr Trump has the legal authority to fire Fed governor Lisa Cook, who he tried to sack last summer over accusations of mortgage fraud. Ms Cook has said Mr Trump's effort to remove her from the board is an attempt to lower interest rates.
Mr Powell was first nominated to the Federal Reserve as a governor by former president Barack Obama in 2012. Mr Trump elevated him to the role of Federal Reserve chief in 2018, and former president Joe Biden renominated him to the post in 2022.
