Powell to Stay as Fed Chief Until His Successor Is Confirmed

The Federal Reserve held interest rates steady, as expected, but what Chair Jerome Powell said next was not.

Powell could continue as a voting member of the Federal Open Market Committee (FOMC) well into a Warsh chairmanship. (Photo: Board of Governors of the U.S. Federal Reserve System Facebook)

First, he said the Fed is not prepared to simply “look through” the surge in oil prices triggered by the war with Iran, breaking from the standard energy-shock playbook.

Second were his comments about his timeline, Nicole Goodkind and Janet H. Cho reported for Barron’s Daily.

Powell said that if his nominated successor, Kevin Warsh, is not confirmed before his chairmanship expires on May 15, he will stay on as chair pro tem. He added that he has no intention of leaving the board until a Justice Department investigation concludes.

After that, he has not decided whether to remain.

This means Powell could continue as a voting member of the Federal Open Market Committee (FOMC) well into a Warsh chairmanship, adding complexity to an already fraught transition.

Powell’s dual message points to a Fed that is more constrained than it has been in years.

After half a decade of inflation running above the 2% target—buffeted by the pandemic, tariffs, and now another energy shock—the policy committee’s instinct to treat oil-price spikes as temporary is no longer automatic.

Powell conditioned any such approach on first seeing tariff-driven goods inflation recede.

Core PCE inflation sits near 3%, much of which, by Powell’s estimate, is driven by tariffs.

That implies the Fed will likely need to see genuine economic weakness before cutting rates again. Wednesday marked the second consecutive pause after three rate cuts. Governor Stephen Miran favored a cut.