Powell to stay on Fed board as divisions deepen, Warsh advances

Jerome H. Powell said Wednesday he will stay on the Federal Reserve Board of Governors after his chair term ends on May 15, 2026, keeping a veteran policymaker inside the central bank at a moment when its internal divisions are widening and Kevin Warsh is advancing as President Donald Trump’s pick to succeed him.

Powell’s current Board term runs until January 31, 2028, giving him the option to remain a voting governor well after he steps down as chair. He said he would stay on until the Fed’s renovation investigation is “well and truly over with transparency and finality,” a signal that the controversy surrounding the central bank’s headquarters project remains part of the transition. The Department of Justice dropped its criminal investigation into Powell and the renovation probe on April 24, removing a major cloud over the leadership change.

The policy backdrop is just as unsettled. The Federal Reserve held its benchmark rate in a range of 3.5% to 3.75% at its April meeting, but the decision exposed a rare split inside the Federal Open Market Committee. The vote was 8-4, with four dissents, the most since October 1992. Stephen Miran dissented in favor of an immediate quarter-point cut, while three other dissenters objected to language that implied additional rate cuts could still be ahead.

That division matters because the central bank is trying to navigate persistent inflation and softer labor-market signals at the same time. Markets are reading the split as evidence that the path to lower borrowing costs may be slower and more contentious than investors had hoped. If inflation stays sticky while growth weakens, the Fed could face pressure from both sides: keeping rates high enough to restrain prices, but not so high that it worsens hiring and consumer stress.

Warsh now enters that environment with less room for error. The Senate Banking Committee advanced his nomination on a 13-11 party-line vote, putting Trump’s choice closer to a final confirmation fight on Capitol Hill. Even if Warsh wins the job, he would inherit a Fed that is already divided over the direction of policy and operating under intense political scrutiny. Powell’s decision to stay on the board means the transition will not simply be a handoff of power, but a prolonged test of who can hold the institution together as inflation, employment and politics pull it in different directions.