Powell said he will stay on as Governor for a period of time yet to be determined. He said he intends to keep a low profile. Powell said the decision was due to ‘unprecedented’ legal attacks and ‘ongoing threats’.
This is a big move and it takes away a potential opportunity for Trump to install another lackey like Miran.
Powell is within his rights to stay as he’s been appointed to a long term and said he will leave when he thinks it’s appropriate. Normally, former Fed chairs resign their governor terms when they’re done but he’s not the first one to stick around.
“Things that happened in last 3 months left me no choice but to see them through at least that long,” Powell said.
Marriner Eccles was Fed Chair from 1934–1948 but he continued to stay on as a Governor until 1951 as he pushed back against government interference. The Fed’s building is named after him and Powell has highlighted him as a great Chairman on many occasions.
This isn’t just a human interest story as it will alter the balance of power at the Fed and makes it less likely that we will be getting rate cuts. That’s why the US dollar is rallying.
Market pricing is now for 3 bps in hikes through year end, rising to a 50/50 chance of a cut by June 2027.
Asked if the decision about Cook will affect his decision on leaving he said “not really”. He also said he hasn’t seen Warsh since they had dinner in January. That’s a bit of a hint at a frosty relationship.
