There are some questions hanging over the Federal Reserve as 2026 gets underway. One of the most important is whether current Chairman Jerome Powell will remain on the Fed when he leaves the chairmanship in May.
CNBC reported that Powell is remaining mum on the subject.
“I’m focused on my remaining time as chair,” Powell said at the December press conference. “I haven’t got anything new on that to tell you.”
CNBC said Powell’s future is a question that is being asked on Wall Street as Fed watchers try to game out the makeup of the rate-setting Open Market Committee and whether appointees of President Donald Trump will have control of the Fed’s powerful Board of Governors
It’s being asked in the Treasury Department and the White House, CNBC said, where administration officials are trying to figure out how many slots on the board Trump will have to fill in 2026, who might fill them, and when those slots will be available.
CNBC said that Fed observers it interviewed said they see it as a wrenching decision for Powell that pits the personal against the professional.
Personal vs. Professional Decision
It may come down to personal vs. professional for Powell.
CNBC said that as a golfer, avid guitar player and relatively new grandfather, Powell is thought to be ready for civilian life after 13 years at the Fed, including eight as chair. It said that for much of those eight years as chair, Powell endured withering public criticism from the president, who named him to the post.
Powell also holds deep loyalty to the Fed and concern about its fate under the challenges posed by a president who has virtually eliminated the independence of multiple government entities, CNBC reported. Trump repeatedly has pressured the central bank to lower rates and made clear that his nominee needs to agree with him or they “will never be Fed Chairman.”
CNBC said that most of those it interviewed said they had no personal knowledge of what Powell would decide, and said they believe Powell likely will leave the Fed when his term as chair ends. None would rule out some possibility that Powell would decide to stay, perhaps even for just a short time. Only former Fed Chair Marriner Eccles stayed on as a governor when his 14-year tenure as chair ended in 1948, CNBC said.
Powell’s decision might be dictated by the numbers, CNBC said. Three Trump appointees currently sit on the seven-member board of governors and if Powell leaves that would immediately hand the president the majority of the board. If they voted as a bloc it could go a long way toward delivering the president his call for ultra-low interest rates.
Of more concern, CNBC said, the Federal Reserve Act appears to give the board’s majority the ability to fire individual bank presidents who oppose rate cuts.
There is some doubt about whether the firing could be done without cause, CNBC said, but Powell’s continued presence on the board, even in the minority, could help stave off such extreme outcomes.
