Washington – The extraordinary clash at the Federal Reserve between Jerome Powell and Donald Trump entered new territory on April 30 when the outgoing US central bank chairman said he would remain on as a governor – and the president lashed him with another insult.
Mr Powell said that while his term at the head of the Fed was ending May 15, he would exercise his right to remain on the board “for a period of time to be determined.”
Mr Powell appeared concerned about the Fed maintaining its independence in the face of unprecedented pressure by the Trump administration.
“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,” he told reporters.
But Mr Powell has long infuriated Mr Trump by ignoring commands to cut interest rates and the Republican president has been itching for him to step down.
“Jerome “Too Late” Powell wants to stay at the Fed because he can’t get a job anywhere else – Nobody wants him,” Mr Trump posted on his social media platform after Mr Powell’s announcement.
It is unusual but not unprecedented for a former chairman to stay on as governor.
Mr Powell, who could stay until 2028, promised to “keep a low profile” under Mr Trump’s pick for a new chairman, Kevin Warsh.
But Mr Trump’s treasury secretary, Scott Bessent, told Fox Business this was a “violation” of Fed norms and “an insult” to Mr Warsh.
Since returning to power last year, Mr Trump has frequently slammed Mr Powell for not cutting interest rates more quickly, a policy that would boost economic activity but could fuel inflation.
The US president separately attempted to oust Fed governor Lisa Cook over mortgage fraud allegations, in a case now standing before the Supreme Court.
His Justice Department meanwhile opened a criminal probe into Mr Powell and the Fed over renovation cost overruns, a move the central banker called a tactic to erode the Fed’s independence.
The Justice Department has dropped that investigation for now, and the Fed chief said he was encouraged by recent developments – although monitoring the remaining steps.
He reiterated that he would not leave the Fed until the probe is “well and truly over,” emphasizing the need for a central bank that operates “free of political influence.”
He also congratulated Mr Warsh on clearing a key hurdle in a rocky confirmation process.
Mr Powell’s remarks came shortly after an unusually divided Fed kept interest rates unchanged for a third straight meeting amid high uncertainty from the Middle East war.
“Inflation is elevated, in part reflecting the recent increase in global energy prices,” the Fed said, keeping rates in a range between 3.50 per cent and 3.75 per cent.
Four out of 12 voting officials opposed the outcome, including governor Stephen Miran, who sought a quarter-point cut.
Three regional Fed presidents – Beth Hammack, Neel Kashkari and Lorie Logan – backed the pause but not the Fed statement signalling an inclination toward interest rate cuts.
It was the largest number of dissenting votes since 1992.
“This suggests a tougher two-way debate on rates at Kevin Warsh’s first (Fed) meeting as chair in June,” ING analysts James Knightley and Padhraic Garvey said.
The Fed has been on a path of rate reductions since late 2025. But with the US-Israel war on Iran causing energy costs to surge and snarling supply chains, analysts are monitoring whether inflation could prompt policymakers to consider hiking rates. AFP
