Jerome Powell says he won’t step down amid probe, may serve as interim Fed chair

Jerome Powell

US Federal Reserve Chair Jerome Powell on Wednesday said he does not plan to step down from the central bank’s board until an ongoing Justice Department investigation linked to renovation costs is completed.

“I have no intention of leaving the board until the investigation is well and truly over, with transparency and finality,” Powell said during a press briefing.

He also said he has not yet decided whether he will continue as a Fed governor after his term as chair ends in May.

His comments marked the first time Powell has given any public indication that he intends to continue serving his term as a governor, which runs until 2028, after his term as chair expires in May. Speculation he would do so has increased in recent months amid a government probe into the US central bank.

Probe and legal developments

The probe relates to cost overruns in renovations at the Federal Reserve’s headquarters. Powell had disclosed the investigation on January 11, calling it a threat to the Fed’s independence.

The administration of Donald Trump has asked a judge to reconsider a ruling that effectively blocked the investigation into Powell.

Powell reiterated that he has not made a decision on whether he will remain on the board once the investigation concludes.

Tenure and succession

Jerome Powell’s term as Fed chair is set to end in May, while his term as a governor runs until January 2028.

Addressing questions on leadership continuity, he said, “If my successor is not confirmed by the end of my term as chair, I would serve as chair pro tem until he is confirmed.”

He added, “that is what the law calls for. That's what we've done on several occasions, including involving me.”

The DOJ in January issued subpoenas to the Fed as part of an investigation into cost overruns in a building renovation project. In a statement at the time, Powell called the reasons for the investigation pretexts and said the probe was really triggered by the Fed’s refusal to set interest rates based on President Donald Trump’s demands.

The subpoenas were blocked by a federal judge earlier this month, but the DOJ said it would appeal that decision.

Court papers released alongside that decision also revealed that Powell felt compelled to stay on at least until the legal process was completed. “To defend the Federal Reserve’s independence, Chair Powell could not resign while the criminal investigation is pending,” the Fed’s lawyers said in a filing.

Trump, who has long implored both Powell and the Fed to lower interest rates aggressively, has nominated a replacement for Powell, former Fed Governor Kevin Warsh. But that process has been delayed by some Republicans in the Senate, who have balked at the investigation. Thom Tillis, a Republican from North Carolina, has said he won’t vote to advance Warsh’s nomination until it’s fully resolved.