Powell Bets on Keeping His Fed Board Seat, Clashing Head-On With Political Pressure

[The Financial News New York = Reporter Lee Byung-chul]Jerome Hayden Powell, chair of the Federal Reserve System (Fed), said he will remain on the Fed's Board of Governors even after his term as chair ends. He intends to stay in place until he believes the Trump administration's investigation and political pressure over the Fed headquarters renovation have been fully resolved.
At what was effectively his final press conference after a Federal Open Market Committee (FOMC) meeting on the 29th local time, Powell again stressed the Fed's independence and drew a clear line, saying political pressure should not influence monetary policy decisions. By deciding to keep his seat on the Fed board, Powell has made it difficult for the board members appointed by President Donald John Trump to secure a majority for the time being.

Powell said, "I will not leave my seat on the Fed board until this investigation is transparent and fully concluded," adding, "I am encouraged by recent developments, but I am carefully watching the remaining process."
He went on to say, "Even after my chair term ends on May 15, I will make decisions based on what is most beneficial to the institution and the public," and added, "I will continue serving as a Fed governor for some time." Powell's term on the Fed board runs through January 2028.
By custom, a Fed chair steps down after serving a four-year term, without being reappointed by the White House. The practice is meant to ensure a smooth transfer of power to the next leadership. The last time a former chair remained on the Fed board for more than three years after leaving the chairmanship was Marriner S. Eccles in 1948.
Markets viewed Powell's future as one of the biggest questions surrounding this FOMC meeting. A hold on the benchmark rate had already been expected, but whether Powell would step away entirely was seen as a key variable for the future direction of monetary policy and the balance of power inside the Fed.
Last week, the DOJ decided to halt its investigation into Powell over the Fed headquarters renovation. Still, concerns remain that the probe could be reopened. Powell reiterated, "I will not leave the Fed until every process is wrapped up transparently and definitively."

Powell repeatedly emphasized the Fed's independence during the day and voiced strong concern over President Donald John Trump's public criticism. He described the president's repeated personal attacks as "unprecedented in the Fed's 113-year history."
He said he was especially worried that "these attacks are shaking the institution itself and threatening its ability to conduct monetary policy free of political factors." It was a warning that any erosion of central bank independence could undermine confidence in financial markets.
Powell also stressed, "I am confident the Fed will continue making decisions based on rigorous analysis, not political considerations," and added, "We have to fight to protect that."
With this decision, President Donald John Trump's plan to secure a majority on the Fed board has become difficult for now. On the seven-member board, Trump appointees include Christopher J. Waller and Michelle Bowman. Even if Kevin Warsh takes over as the next chair, the internal balance of power is unlikely to shift sharply in the short term as long as Powell remains on the board.


pride@fnnews.com Reporter Lee Byung-chul Reporter