US Federal Reserve Chairman Jerome Powell departs after his final press conference following the two-day meeting of the Federal Open Market Committee (FOMC) at the US Federal Reserve in Washington, DC, US on April 29, 2026.
Kevin Lamarck | reuters
How will you change the regime when the old head is not leaving?
That’s the question facing Federal Reserve chair candidate Kevin Warsh next month after he is confirmed by the Senate, now that outgoing Chairman Jerome Powell has confirmed he will remain indefinitely as a voting member of the Fed’s Board of Governors.
Powell’s decision to pause has little precedent in Fed history, but it may be less disruptive to Warsh’s plans than it might otherwise seem. Powell said at Wednesday’s press conference that he has no desire to become a “shadow chair” and that his plans for an extended tenure at the Fed are entirely outside the notoriously crumbling walls. Mariner S. Eccles Headquarters Building.
Powell is justified in rejecting the idea of a shadow chair as it was an idea brought up specifically to weaken him. treasury scott besant He proposed a plan for a shadow Fed chairman in October 2024 when he was still a private citizen. Now-President Donald Trump was fed up with Powell even before he won the election that year, so Besant proposed naming a replacement very early on. Besant said, “On the basis of the concept of forward guidance, no one is really going to care what Jerome Powell has to say.”
Trump still cares about Powell, but Powell went out of his way on Wednesday to suggest that Wersch doesn’t need to be overly concerned about getting along with the former president.
“There’s only one chair,” Powell said. Like Warsh, Powell was appointed by Trump before the president developed disloyalty to him.
He said, “You know, I don’t want to be some high-profile dissident or anything like that.”
Instead he is looking to address perceived threats to the Fed’s independence from the Trump administration’s legal attacks on the independent central bank. Congress gave the Fed the power to set interest rates without thinking about politics, and Powell plans to keep it that way. Otherwise politicians of all kinds will be tempted to juice the economy through low rates and risk rising inflation.
Powell wants to see a definitive resolution to the criminal investigation that was brought and then dropped by Jeanine Pirro, the U.S. Attorney for the District of Columbia. She has said she plans to appeal the judge’s decision to revoke her subpoena. Sen. Thom Tillis, R-N.C., who was key in brokering a deal between Pirro and Powell, said Sunday that he believed Powell would likely remain until the appeal is resolved. This may take months.
Powell’s decision to remain at the Fed essentially prevents Trump-related fights for Warsh. Powell effectively becomes the board’s nominee for Trump’s veto, while Wersch works to put his stamp on the Fed.
This could also mean that the kind of press conference Powell was speaking in should also be rejected. Warsh refused to commit to holding a press conference at the same time as Powell at his nomination hearing. The outgoing president acknowledged that this would essentially depend on Varsh.
“I think our communications are fine, but it’s the most natural thing in the world to consider doing it in a different, better way,” Powell said.
The change in communications may have led to the most notable policy development at Wednesday’s meeting. Three Fed officials disagreed with the Fed’s decision, saying they objected to the “innate bias” in the policy statements issued by the Fed. Those officials agreed with the overall decision to keep interest rates steady, but did not want to signal that the Fed was still seriously considering cutting interest rates given the risks to inflation from the Iran war. (Warsh has promised to cut interest rates soon.)
Fed forward guidance on the rocks
Those comments are “a form of forward guidance,” Powell said — a way to tell the market what’s going to happen in the future.
Warash opposes that practice.
“I generally do not believe that the Federal Reserve should provide forward-looking guidance as is currently the practice,” he wrote in response to questions from Senate Democrats.
Warsh also said in those written comments that he wants to “reform” the Fed’s 12 regional reserve banks. For example, he said he is open to residency requirements that would ensure bank presidents come from the districts they represent.
Powell said that he is ready for changes in the reserve banks also. “There’s a back and forth on that,” he said.
The only area on which Powell would draw the line would be wholesale firing of regional Fed chairmen. The president’s aides have floated an idea that would be within the board’s authority but would be unprecedented. A rotating group of those presidents vote on monetary policy, so replacing them with loyalists could be a backdoor way to cede power to the administration.
“This will be the beginning of the end of the Fed’s ability to make monetary policy independently,” Powell said.
But Varsh has shown no sign of considering the plan. He criticized Senator Lisa Blunt Rochester, D.-Del., at her confirmation hearing last week. Said that overthrowing Fed chairmen was not in his plans for regime change. They mean “changes in the policy regime,” he said.
There may be a conflict in interest rates
This means that as far as Powell is concerned, the only major challenge for Wersh will be building consensus within the Fed to set interest rates. Wednesday’s disagreement shows it won’t be easy. But Powell, whom Warsh described as a fail chair Whoever chose inflation went out of his way to say that Warsh was up to the task.
The chairman’s job is to “build consensus” among Fed voters and “be inside their thinking,” Powell said.
“Warsh has the abilities and the skills to be very good at this,” Powell said.