Powell faces Trump standoff as his Fed chair tenure nears its end

Chairman of the Federal Reserve Jerome Powell is set to deliver what is expected to be his final news conference as Fed chief on Wednesday.

However, the end of his presidency next month may not mark his departure from the world’s most powerful central bank – and the circumstances are setting the stage for a standoff between Powell and President Donald Trump.

If Powell steps down, it would open up a seat for Trump, giving him another opportunity to shape the Fed’s leadership. If he stays, he would retain his influence over US monetary policy, thus intensifying tensions with the president.

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President Donald Trump speaks to Fed Chairman Jerome Powell during a tour of the Federal Reserve construction site in Washington, DC, July 24, 2025. (Daniel Torok/Official White House Photo)

What began as a disagreement over interest rates evolved into a broader confrontation between Powell and Trump, marking one of the most tense periods of his eight years as head of the Fed.

Trump has stepped up his pressure campaign in recent months, publicly criticizing the Fed’s benchmark interest rate decisions and sometimes resorting to personal attacks.

Powell’s tenure at the central bank dates back to 2017, when he was chosen by Trump to succeed Janet Yellen. He was reappointed for a second four-year term by President Joe Biden in 2022, which expires May 15. However, his underlying tenure as Fed governor is longer, allowing him to stay at the central bank until 2028.

In March, Powell told reporters he had not decided his next steps and declined to say whether he would remain on the Fed board after his term as chairman ends.

Powell’s decision could now have major implications for markets and politics – and further inflame these tensions.

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President Donald Trump appointed Jerome Powell to head the Federal Reserve in 2017. (Al Drago/Bloomberg/Getty Images)

Attention now turns to the question of who will lead the Fed next. And at the same time, the Supreme Court is expected to rule on a case involving Fed Governor Lisa Cook that could test the limits of presidential power over the central bank.

Trump chose a millionaire Kevin Warsh as a potential successor to Powell.

The contentious confirmation process had been delayed by a Justice Department investigation into Powell’s congressional testimony regarding renovations to the Fed’s headquarters in Washington, D.C., which some lawmakers said needed to be resolved before moving forward.

Sen. Thom Tillis, R-N.C., called the DOJ investigation “bogus” and vowed to block Warsh’s nomination until it was dropped — although he did not object to the quality of Trump’s pick.

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Kevin Warsh is a former Morgan Stanley banker and became the youngest member of the Fed’s Board of Governors in 2006. (Andrew Harnik/Getty Images)

With the investigation now closed, a Senate committee is expected to consider Warsh’s nomination, putting the former Morgan Stanley banker on track for a full Senate vote.

Like Powell, Warsh is not a trained economist, but rather has a background in law and finance. He previously served on the Fed’s Board of Governors, becoming the youngest member in its history at age 35.

His potential return comes at a critical time for the central bank.

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The question of the Fed’s leadership arises as policymakers weigh persistent inflation, the economic impact of the war in Iran and the fragile global outlook ahead of the U.S. midterm elections.