Federal Reserve Chair Jerome Powell speaks during a press conference following the Federal Open Markets Committee meeting at the Federal Reserve in Washington, Dec. 10, 2025.
Chip Somodevilla | Getty Images News | Getty Images
The saga over President Donald Trump’s efforts to reshape the Federal Reserve has another twist to it, revolving over whether current Chair Jerome Powell will leave after his term at the helm is finished.
Powell is done as the central bank leader on May 15, and it’s highly likely Trump will nominate his successor long before then. In fact, Treasury Secretary Scott Bessent told CNBC on Tuesday that the long-awaited pick could come as soon as next week.
However, Powell’s 14-year term as governor stretches to Jan. 31, 2028.
Historical precedent has been for almost all outgoing Fed chairs to leave their governor roles as well, but Powell could decide to buck that pattern if he feels threats to central bank independence are stark enough to necessitate him staying. That’s what Marriner Eccles did in the late 1940s as he viewed his removal by then-President Harry Truman as a political move.
Increasingly vocal
Trump has gotten increasingly vocal about controlling the Fed. That has happened through persistent criticism of Powell and his colleagues, his own appointments, as well as saying that he thinks the president should be consulted on interest rate decisions.
Some on Wall Street think the prospect of Trump gaining further control of the Fed Board of Governors and using that to steer monetary policy might convince Powell to stay on. Such speculation has heightened in recent days following revelations that the Justice Department is investigating Powell for potential criminal prosecution and Powell’s public statement that a related subpoena is “pretext” for Trump in his push to control the Fed.
The sequence of events “makes it much more likely that Powell, [Fed Governor Michael] Barr and others will stay on after May,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a recent note.
Though Barr’s term runs into 2032, there also had been some chatter that he might choose to walk away. Barr previously had been the vice chair of bank supervision but left the post shortly after Trump’s second stint as president began, heading off a potential move by Trump to replace him. He was replaced in the supervisory post by Governor Michelle Bowman, a Trump appointee during his first term.
Similarly, Philip Jefferson, the vice chair of the rate-setting Federal Open Market Committee, also could choose to stay or leave a seat that doesn’t expire until January 2036.
But speculation on the Street is increasing that the threats to Fed independence could raise the possibility that all the current governors stay on.
“We think the probability of Chair Powell remaining on the Board as a governor after his chairmanship expires in May has increased with the release of his statement,” Nomura economists said in a note. “Trump’s attempt to influence monetary policy could encourage pushback from current FOMC participants.”
Markets see Powell out
Traders, though, are betting that Powell leaves.
Prediction markets site Kalshi currently has odds on Powell leaving before August 2026 at 70%, a bet that implies he would leave the seat either immediately or shortly after being replaced as chair, assuming Trump’s nominee clears the Senate. Sen. Thom Tillis, R- N.C., has vowed to block any Fed appointments until the Department of Justice issue is resolved.
For his part, Powell has refrained from addressing the issue. A Fed spokesman contacted by CNBC.com said there would be no comment from the chair’s office.
At a news conference after the Fed’s last meeting in December, Powell also dodged a question about the issue, saying only, “I’m focused on my remaining time as chair. I haven’t got anything new on that to tell you.”
In the meantime, Trump’s efforts to push Powell out of his office could backfire, hardening the position of other Fed officials at a time when the president continues to push for lower rates.
“The bottom line is that Trump’s push for Fed compliance ironically may lead to more Fed independence,” wrote market veteran Ed Yardeni, head of Yardeni Research. “Accordingly, President Trump’s appointee for Fed chair may be less able to forge a consensus around his or her views than past Fed chairs have been — giving Trump less control over the Fed’s actions than Trump may anticipate.”
