It could be a fable whose moral would strongly displease Donald Trump: by trying to push Jerome Powell out of the Federal Reserve (Fed), the president risks extending his career as a central banker.
The end of Powell’s term is approaching, but the arrival of his successor designated by the White House is stalled.
An update on this unusual transition at the top of the central bank of the world’s largest economy.
Where do we stand?
In theory, Jerome Powell will preside over his final meeting on US interest rates in a month, on April 28 and 29. His term ends at the end of May.
He took the helm of the Fed under the first presidency of Donald Trump and was renewed under Democrat Joe Biden.
Since his return to power in January 2025, the Republican has tirelessly criticized him, calling him an “idiot,” “incompetent,” and “possibly dishonest.”
Donald Trump, who demands much lower interest rates, has tried various means to oust him and push him to resign, but without success.
The President even criticized the renovation cost of the Fed’s headquarters in Washington, which rose to $2.5 billion from an initial $1.9 billion.
The climax of this destabilization campaign: a prosecutor close to Donald Trump, Jeanine Pirro, launched legal action against these works.
Jerome Powell revealed this in January in a solemn speech and denounced it as a “pretext” to attack the Fed’s independence.
The announcement raised objections from the economic circles and some Republican officials.
Shortly after, the White House designated Kevin Warsh, a former Fed governor, as Powell’s replacement on January 30.
What is the hold-up?
The Senate has the power to confirm Kevin Warsh’s nomination, who the markets view as a credible candidate for the role.
The presidential majority is slim, allowing Republican Senator Thom Tillis from North Carolina (southeast) to block the process.
He vows to do so until the legal proceedings against Jerome Powell are resolved.
A judge dismissed the lawsuit, seeing it as a way to “harass Mr. Powell.” Jeanine Pirro said she would not back down and intends to appeal.
Thom Tillis warned on March 13 that this would only delay Kevin Warsh’s confirmation as a Fed governor.
As long as Mr. Warsh is not confirmed, Mr. Powell can continue as president.
Even once his successor is in place, he could choose to stay on as a simple governor (his term only ends in early 2028).
Traditionally, the former chief leaves to avoid overshadowing the next one. But the situation is far from ordinary, and the U.S. executive fears that Jerome Powell will cling to his seat to prevent Donald Trump from appointing a loyalist.
To drive the point home, Powell recently stated that he will not leave the Fed until the legal proceedings are “properly concluded, transparently, and definitively.”
Published on March 29 at 4:17 PM by AFP.
