The Federal Reserve recently took the rare step of renewing the appointment of a regional president in advance, successfully establishing a 'moat' to defend its independence. Wall Street analysts believe this key move has reassured Powell that the central bank is 'in good hands.'
After enduring a series of attacks on the Federal Reserve, Powell may now feel confident that the Fed has found some support and that he can fully step down once a new chair takes over.
Earlier this month, the Federal Reserve reappointed its regional Fed presidents earlier than usual, a move that surprised Wall Street and eased concerns about whether the Fed could maintain its independence amid Trump's persistent demands for aggressive interest rate cuts.
Previously, the Trump administration hinted at imposing new conditions on the regional Fed presidents, fueling fears of a government-led 'purge' of the Federal Reserve. This concern aligns with the recent pattern of extreme pressure on policymakers: Trump relentlessly criticized Powell for insufficient rate cuts, considered firing him, threatened to sue him over cost overruns in the renovation of the Fed's headquarters, and is currently attempting to remove Fed Governor Lisa Cook.
Given Powell’s commitment to the Fed’s independence, there had been doubts about whether he would break tradition and choose not to resign as a Fed governor when a new chair takes office. By staying, he could retain his voting rights on the Federal Open Market Committee (FOMC), which sets interest rates, to help ensure policy remains non-political. Powell’s term as chair ends on May 15, 2026, but his term as a governor extends until January 2028.
However, with the reappointment of regional Fed presidents, the FOMC—composed of governors and regional presidents—has gained an additional layer of stability, potentially allowing Powell to retire comfortably.
“I don’t think Powell wants to stay. I think he’s had enough of the job, and I don’t blame him,” Christopher Hodge, chief U.S. economist at Natixis CIB Americas, told Fortune.
Hodge believes it is highly likely that Powell will leave the Board of Governors, though some uncertainties remain. One is Trump’s choice for the new Fed chair. The current list of candidates—Kevin Hassett, Kevin Warsh, and Chris Waller—is acceptable; however, according to Hodge, who previously served as chief economist at the New York Fed, the emergence of an unexpected or unserious candidate might make Powell hesitate about stepping down.
Another unknown is how the Supreme Court will rule on Trump’s attempt to remove Cook over allegations of mortgage fraud, which Cook has denied. If the justices rule that the White House can easily dismiss Fed governors, Powell might choose to stay.
“But at the end of the day, I think the reappointment of the regional Fed presidents was an obstacle he wanted to overcome, and it undoubtedly clears the way for him to step down after the May meeting,” Hodge said.
He added, “As long as Powell is reasonably confident that the ‘guardrails’ remain intact and the Fed is in a position to maintain credibility over the long term, I think he will resign from the Board.”
Robert Kaplan, former president of the Dallas Fed and currently a senior advisor at Goldman Sachs, stated that the reappointment of regional Fed presidents is a significant piece of news that has not received adequate attention.
He told CNBC last week that there were concerns the reshuffle of the Federal Reserve Board could lead to changes in regional Fed presidents since their appointments require approval from the board.
"I don't think this kind of 'purge' is likely to happen. This means the next Fed Chair will have to secure seven votes through persuasion, debate, and consensus-building. You can't just walk in and assume you'll have those seven solid votes," Kaplan added, referring to the support needed for a majority in the 12-member FOMC.
He also urged Powell not to remain on the Board after his term as Chair ends. Kaplan explained that if Powell chooses to stay, it might be perceived as an obstacle for the new Chair.
"Just as a CEO fully transfers power to their successor upon departure, I think that would be the appropriate thing to do," he said. "I believe Powell is a person of grace, and I think this would be the right decision for him."
Editor/Doris