Fed meeting updates: Jerome Powell says he'll stay on the FOMC after his term as chair ends [Business Insider]
Fed meeting updates: Jerome Powell says he'll stay on the FOMC after his term as chair ends
The Federal Reserve concluded its two-day policy meeting Wednesday with a widely expected decision to hold interest rates steady, but the real headline came during Chair Jerome Powell’s press conference: He plans to remain on the Federal Open Market Committee even after his term as chair expires next year.
“I expect to stay on as a member of the Board of Governors after my term as chair ends,” Powell told reporters, a statement that immediately sent market analysts scrambling to reassess the political dynamics shaping the central bank’s future. The chair’s current term as the head of the Fed expires in May 2026, but his term as a governor on the Board runs through 2028. By law, he can remain on the FOMC as a voting member even after stepping down as chair.
The announcement came against a backdrop of rising political tension. President-elect Donald Trump, who has been openly critical of Powell’s leadership, has suggested he might try to remove the chair if elected. Trump appointed Powell in 2018 but later berated him for raising rates. In recent months, Trump has floated the idea of “having a say” over Fed policy, which would break decades of central bank independence.
Powell, however, was characteristically blunt when asked about the possibility of being pushed out. “The law is clear: I cannot be removed simply because someone disagrees with my policy decisions,” he said. “I have no plans to leave before my term ends, and I’ll continue to serve as long as the board confirms my role.”
The Fed’s decision to hold rates at the current 4.25%–4.50% range was unanimous, but the statement accompanying it contained subtle language shifts that economists are already parsing. The committee dropped its previous reference to “further progress” on inflation and instead noted that “inflation remains somewhat elevated.” Powell emphasized that the central bank is in no rush to cut rates, despite growing pressure from Wall Street for relief.
“We need to see more evidence that inflation is sustainably moving toward 2% before we adjust policy,” Powell said. “The economy is strong, the labor market is resilient, and we have the luxury of being patient.”
The markets initially dipped after the statement but recovered during the Q&A session as traders digested Powell’s comments on his future. The S&P 500 closed roughly flat, while the 10-year Treasury yield ticked slightly lower. Bond markets are now pricing in a 45% chance of a rate cut at the June meeting, down from 60% a month ago.
Powell’s decision to stay on the FOMC has significant implications for the composition of the committee. If he remains a governor, he will continue to vote on interest rate decisions, and his influence could shape the Fed’s direction well into 2028. That timeline overlaps with the first term of the next presidential administration, potentially creating a scenario where the White House and the Fed are at odds for years.
“This is a power move,” said Diane Swonk, chief economist at KPMG. “Powell is signaling that he’s not going to be a lame duck. He’s going to remain a force in monetary policy, and that changes the calculation for anyone thinking they can reshape the Fed quickly.”
The chair also addressed the growing debate over the Fed’s independence, which has become a flashpoint in the presidential campaign. Trump’s economic advisers have floated ideas like requiring the Fed to coordinate interest rate decisions with the Treasury or even giving the president a seat on the FOMC. Powell made no direct mention of Trump but offered a pointed defense of the central bank’s autonomy.
“The independence of the Federal Reserve is a bedrock principle of our economic system,” he said. “It allows us to make decisions based on data, not short-term political pressures. We owe it to the American people to protect that independence.”
On the economic outlook, Powell struck a cautiously optimistic tone. GDP growth is running at a solid pace, the unemployment rate remains below 4%, and consumer spending has held up better than expected. However, he flagged two risks: stubborn inflation in services and the potential effects of new tariffs that the incoming administration has threatened to impose.
“Tariffs could push up prices in certain sectors, and we’ll have to factor that into our forecasts,” Powell said. “But it’s too early to say how significant that impact will be.”
The next FOMC meeting is scheduled for March 18–19, with new quarterly economic projections due then. Analysts expect the committee to hold rates steady again, with the first cut potentially coming in the second quarter if inflation continues its gradual decline.
For now, the biggest story out of Washington is not just about interest rates—it’s about who will set them. And Jerome Powell has made it clear: He’s not going anywhere anytime soon.
Ahmed Abed – News journalist