Powell May Remain on Fed Board After Chair Term Ends Next Year

Federal Reserve Chair Jerome Powell's leadership term expires in May 2026, but he could potentially remain on the Board of Governors until 2028 due to his separate 14-year term as governor. This situation has created strategic considerations for President Trump, who has expressed interest in appointing a new Fed chair but may face limited opportunities to reshape the central bank's composition if Powell stays on the board.

The immediate focus is on filling the vacancy left by Governor Adriana Kugler. Trump has indicated he might make a temporary appointment for this position, potentially reserving the option to appoint his preferred Fed chair candidate to this seat later. The timing is significant because if Powell remains on the board after his chairmanship ends, Trump's ability to appoint new governors would be constrained, potentially leaving him with just one appointee on the seven-member board.

This situation draws parallels to a historical precedent from 1948, when President Harry Truman replaced Fed Chair Marriner Eccles but Eccles remained on the board. Eccles subsequently led internal resistance to White House efforts to control interest rates, ultimately contributing to the 1951 Treasury-Fed Accord that established greater central bank independence. This historical example has gained renewed relevance given the current circumstances.

Trump has publicly criticized Powell's monetary policy decisions, particularly regarding interest rate management. Market expectations currently anticipate several rate cuts through 2026, bringing the benchmark rate to approximately three percent. Various candidates have been mentioned as potential successors to Powell, including former governor Kevin Warsh and White House economic adviser Kevin Hassett.

Some within the administration have suggested a potential compromise scenario where Trump would appoint Christopher Waller, a current Trump-appointed governor, as chairman in exchange for Powell resigning his governorship. This would allow Trump to fill another board seat while installing someone who has previously supported interest rate cuts but maintains credibility within the Federal Reserve system.