The Fed might have convinced Powell that it’s safe for him to leave the board earlier when a new chair takes over: ‘I think he’s finished with this job’

After facing a series of attacks on the Federal Reserve, Jerome Powell might now be confident that the central bank is in capable hands to completely step aside when a new chair takes over.

Earlier this month, a bit earlier than normal, it surprised Wall Street and alleviated concerns about its independence in the face of President Donald Trump’s continuous demands for deeper rate cuts.

This followed recent suggestions from the Trump administration that new conditions should be imposed on the Fed presidents, raising fears of a purge. This fit a pattern of extreme pressure on policymakers. Trump has constantly insulted Powell for not easing more, considered firing him, threatened to sue over cost overruns on the Fed’s headquarters renovation, and is still trying to remove Governor Lisa Cook.

Previously, there were doubts that he would leave the board of governors when his replacement as chair arrives, going against tradition, to retain a vote on the rate-setting Federal Open Market Committee and help ensure policy remains apolitical. His [term as chair] expires on May 15, 2026, but his term as a governor extends to January 2028.

However, with the regional presidents being reappointed, that adds some stability to the FOMC, which consists of governors and presidents, potentially allowing him to leave gracefully.

“I don’t think Powell wants to stay. I think he’s finished with this job, and I don’t blame him,” Christopher Hodge, chief U.S. economist at Natixis CIB Americas, told [the publication].

He gave a high likelihood to Powell leaving the board, but a few uncertainties remain. One is Trump’s choice for the new Fed chair. The current names under consideration – Kevin Hassett, Kevin Warsh, and Chis Waller – would be acceptable, but an unqualified candidate from left field would make Powell hesitate, according to Hodge, who previously worked as principal economist at the New York Fed.

Another unknown is how the Supreme Court will rule on Trump’s attempt to fire Cook over mortgage fraud claims, which she has denied. If the justices decide the White House can easily remove governors, then Powell might stay.

“But ultimately, I think this reappointment of these regional Fed presidents is a hurdle he wanted to overcome, and I think that definitely helped clear the way for him to step down after the meeting in May,” Hodge said.

He added, “as long as Powell is reasonably certain that the safeguards are in place, and that the Fed is in a long-term position to remain credible, then I think he’s going to step down” from the board of governors.

Robert Kaplan, vice chairman at Goldman Sachs and former president of the Dallas Fed, said the reappointment of the Fed presidents was significant news that didn’t receive much attention.

He [stated] last week that there was some concern that a reshuffle on the board of governors would lead to changes in the Fed presidents, who need to be approved by the governors.

“I think it’s possible that that won’t occur. And that means the next Fed chair will have to obtain seven votes through persuasion, debate, and reaching a consensus. You won’t come in with seven votes guaranteed,” Kaplan added, referring to the votes required for a majority on the 12-member FOMC.

He also urged Powell not to stay on the board when his term as chairman ends. If Powell remains, he might be seen as a nuisance to the new chair, Kaplan explained.

“In the same way a CEO would leave and hand it over to their successor, I think that’s the gracious thing to do,” he said. “I think Jay is a gracious person, and I think it’s the right thing for him to do.”