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Normally, it wouldn’t be unusual to have a Federal Reserve chair — or any Fed official — say they plan to serve out their full term.
As we keep saying, these are not normal times.
So it’s notable that Fed Chair Jay Powell said Friday that he plans to remain in his role. If this week is any indication, the next year seems like it could be a rather . . . important period for US price stability. And employment. And financial stability, for that matter.
“I fully intend to serve all of my term,” Powell said in a Q&A with the Society for Advancing Business Editing and Writing, or Sabew.
It wasn’t 100-per-cent clear what exact period of time he meant: he’ll be chair of the rate-setting policy committee until May 2026, but his full term on the Board of Governors continues until January 31 2028. (He has previously declined to answer the question of whether he’ll stay until 2028.)
One reason this is interesting: If he does plan to stick around until 2028, Fed Board members serve on the rate-setting policy committee, so this would give him continued (if somewhat diminished) influence over monetary policy after the end of his leadership role.
Another reason that’s maybe more pressing: There seems to be a nascent conflict between him and the US President about rate policy.
Minutes before Powell started speaking at the Sabew event, President Trump posted that it would be “a perfect time” for the Fed to cut rates. This certainly breaks decorum, and in the past, presidential comments about rates have been interpreted as an assault on the Fed’s independence (which has only really existed since 1951, and was not imposed by Congress).
But the White House is making far more aggressive intrusions into other agencies’ independence. And it’s been threatening an aspect of independence that has the legal protection of being created by Congress: Personnel, and their terms of service.
The Trump Administration dismissed two Federal Trade Commissioners last month, despite a 1935 ruling that says the president doesn’t have “illimitable power of removal” for agencies created by Congress. This was in a case specifically about the FTC.
Still, Powell doesn’t seem too concerned about monetary policy input from the US President at the moment.
“It feels like we don’t need to be in a hurry” to cut rates, he told Sabew. Stocks didn’t have a huge reaction to that news in real time, though, so it doesn’t seem like investors were waiting on Powell to save their bags.
