Powell at the Crossroads: Leadership Drama at the Federal Reserve

The Justice Department's investigation into Jerome Powell could influence his decision to remain on the Federal Reserve's board after his term as chair ends. Historically, outgoing Fed chairs step down, but Powell remaining as governor would challenge political dynamics and potentially alter interest rate adjustments.

The Justice Department's probe into Federal Reserve Chair Jerome Powell has escalated attention on a pivotal decision unfolding at the central bank: whether Powell will depart when his chairmanship concludes or stay on as a governor. Powell's term as chair ends May 15, yet his role on the governing board extends to January 31, 2028.

Traditionally, outgoing Fed chairs have exited the board, but Powell could break precedent by remaining, causing a significant shift in the board's dynamics. A criminal investigation into Powell has been perceived as a maneuver to deter his continued presence, which would prevent the White House from gaining a majority and hinder efforts by the Trump administration to assert greater control over the Fed.

Supporters argue Powell's presence is crucial, citing the institution's historical independence from political influence. If Powell stays, it could potentially delay the Federal Reserve's response to political pressures concerning interest rates, complicating Trump's aspirations to reshape the institution's direction.

(With inputs from agencies.)