Outgoing Federal Reserve Chair Jerome Powell is staying on the Board of Governors. This decision comes as President Trump’s legal challenges threaten the central bank’s independence. A now-dropped DOJ investigation into Fed renovations sparked the conflict, with Trump also threatening to fire Powell and Governor Lisa Cook over policy disputes.
The Supreme Court has delayed a ruling on Trump’s authority to dismiss governors for cause, allowing Cook to remain until arguments next year. Powell’s term as Chair ends between February and May 2026. Trump has nominated Kevin Warsh as his successor, but Senate resistance tied to these controversies is creating hurdles.
Market pricing reflects this uncertainty: Warsh’s confirmation by May 15 is priced at 90.4% YES, down from 94% yesterday. The scenario marks unprecedented executive pressure on the Fed as the Board edges toward a potential Trump-aligned majority.