Powell Says He Will Stay at the Fed as Kevin Warsh Moves Closer to Chairmanship
Powell Says He Will Stay at the Fed as Kevin Warsh Moves Closer to Chairmanship
Washington, April 30, 2026 — Federal Reserve Chair Jerome Powell said he plans to remain on the Federal Reserve Board as a governor after his term as chair ends in May, even as Kevin Warsh, President Donald Trump’s choice to lead the central bank, moves closer to confirmation.
The decision adds a new layer of tension to an already sensitive leadership transition at the Fed. Powell said he does not intend to act as a “shadow chair” or challenge the next leader’s authority. Instead, he said he would keep a low profile and support Warsh where possible. Reuters reported that Powell made the remarks during a news conference after the Fed’s latest policy meeting.
Warsh Advances in the Senate
Kevin Warsh cleared an important hurdle when the Senate Banking Committee approved his nomination on a party-line vote. According to AP, the committee voted 13-11, with Republicans supporting him and Democrats opposing him.
Warsh is a former Federal Reserve official and has been openly critical of the central bank’s recent leadership. He has argued that the Fed made serious mistakes during the inflation surge of 2022, when inflation reached 9.1%.
Why Powell’s Decision Matters
Powell’s choice to remain as a governor is unusual because Fed chairs often leave the board when their chair term ends. By staying, Powell keeps a seat inside the central bank during a politically charged period. The Washington Post reported that his governor term runs into early 2028, meaning the Trump administration would not immediately gain another Fed vacancy.
Powell framed his decision as a way to protect the Federal Reserve’s independence. He has faced strong criticism from Trump, who has repeatedly pushed for lower interest rates. Powell, however, has argued that the Fed must make decisions based on economic data, not political pressure.
Interest Rates Stay Unchanged
The Fed kept interest rates steady at its latest meeting, with the key rate around 3.5% to 3.75%, according to reports. The decision came as officials weighed inflation risks, higher energy prices, and uncertainty in the broader economy.
Warsh has supported additional rate cuts, which could lower borrowing costs for mortgages, car loans, and business credit. However, AP noted that rising gas prices linked to the Iran war have pushed inflation to a two-year high of 3.3%, making quick cuts harder to justify.
A Test for Fed Independence
The leadership change is not only about monetary policy. It is also a test of whether the Federal Reserve can remain independent while facing pressure from the White House and Congress.
Supporters of Warsh say he will bring fresh thinking to the Fed. They argue that the central bank needs reform after years of inflation pressure and public frustration over high borrowing costs. Critics worry that Warsh may be too close to Trump’s political goals and could weaken the Fed’s independence.
Powell Promises Not to Interfere
Powell said he understands how difficult it is for a Fed chair to build agreement among board members. He said he would not make that job harder for Warsh. Reuters reported that Powell said he would try to support the direction of the chair when he could, while still acting according to his judgment.
That message appears designed to calm markets and reassure policymakers. Investors often look for stability at the Fed because sudden changes in tone can affect stocks, bonds, mortgage rates, and the value of the dollar.
What Comes Next
Warsh still needs approval from the full Senate. If confirmed, he could take over when Powell’s term as chair ends on May 15, 2026.
The coming months may shape the future of U.S. monetary policy. Warsh could push for changes in how the Fed communicates, how it studies the economy, and how it manages its large bond holdings. At the same time, Powell’s continued presence on the board could provide experience and continuity during the transition.
Bottom Line
The Federal Reserve is entering a rare and delicate moment. Powell is stepping down as chair but staying inside the institution. Warsh is moving closer to becoming the next chair. Interest rates remain steady, inflation is still a concern, and political pressure on the Fed remains high.
For households and businesses, the outcome matters because Fed policy affects loans, credit cards, savings rates, jobs, prices, and overall confidence in the economy. The next Fed chair will face a difficult balancing act: lowering borrowing costs without allowing inflation to rise again.
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