Jerome Powell has confirmed he will remain a governor of the Federal Reserve after his term as chair expires on May 15, a break with decades of precedent that has provoked fury from the Trump administration and underscored the deepening politicisation of American monetary policy. At his final press conference as Fed chair, Powell said he would stay on the board “for a period of time, to be determined,” citing what he called “unprecedented” legal attacks by the executive branch that he fears are “battering this institution.” The decision denies President Donald Trump the opportunity to fill the seat with his own appointee and drew a blistering response from Treasury Secretary Scott Bessent, who told Fox Business it was “a violation of all the rules of the Fed” and an “insult” to Powell’s designated successor, Kevin Warsh, whose nomination was approved by the Senate Banking Committee hours earlier on a party-line vote.

The rate-setting decision itself was overshadowed by the controversy over Powell’s future. The Federal Open Market Committee voted 8–4 to hold the benchmark rate at 3.5–3.75 percent for the third consecutive meeting, the largest number of dissents since October 1992. Three governors—Beth Hammack, Neel Kashkari, and Lorie Logan—objected to language hinting at a future cut, while Stephen Miran, a Trump ally, dissented in favour of an immediate reduction. The split reflects an institution grappling with conflicting pressures: inflation remains stubbornly above the 2 percent target, having edged up to around 3.2 percent, while energy prices have surged amid the conflict in the Middle East. The Fed’s statement explicitly noted that “developments in the Middle East are contributing to a high level of uncertainty” about the economic outlook, a clear reference to the disruption in the Strait of Hormuz and rising oil costs.

Viewed from Washington, Powell’s decision to stay is as much a defensive manoeuvre as a statement of principle. He told reporters he would not leave before a “transparent and final” conclusion of the legal investigation into his conduct, a reference to probes initiated by the Justice Department under Trump. Analysts in London note that Powell’s move effectively ties the hands of his successor before he has even taken office: Kevin Warsh will inherit a committee riven by internal dissent, an inflation trajectory that is moving “in the wrong direction,” and a president who has repeatedly demanded lower rates. In Tehran, state media framed the Fed’s hold as evidence that American economic policy remains hostage to “warmongering” in the Gulf, while European commentators in Zurich and Frankfurt warned that the erosion of central bank independence is a slow-moving crisis that transcends one man’s tenure.

Looking ahead, the question is not whether the Fed will eventually cut rates—every member of the FOMC still projects some easing this year—but when, and at what cost to its credibility. Powell’s promise to keep a “low profile” as a governor rings hollow given the political storm he has ignited. His continued presence on the board means the incoming chair will be shadowed by his predecessor, a dynamic that risks further fragmenting the committee. For the global economy, the stakes are high: a Fed that appears divided and politically compromised is ill-equipped to steer the world’s largest economy through an energy shock, a trade war, and the lingering effects of the post-pandemic inflation cycle. The next few months will test whether the institution’s vaunted independence can survive its most aggressive assault in a generation.