Also Wednesday, the Senate Banking Committee planned to vote on whether to confirm President Donald Trump’s nominee, Kevin Warsh, to succeed Fed Chair Jerome Powell. The committee was expected to approve Warsh, sending his nomination to the full Senate, with the timing placing the confirmation fight and the Fed’s internal leadership question in the same tight news window.
Powell’s Wednesday afternoon news conference, however, may draw the most immediate attention for markets and for the politics around Fed independence. The Federal Reserve chair’s leadership term ends May 15, but he holds a separate term on the board of governors that lasts until January 2028. The central question is whether Powell will stay on that board after his chairmanship concludes—an outcome that would be unusual, and potentially meaningful for how the board functions during the transition.
Powell has previously suggested he could remain. The AP report notes that chairs typically leave the board when their leadership terms end, but Powell has signaled he could stay, which would be the first time a former chair remained on the board since 1948. The stakes, as described in the report, include depriving Trump of the chance to pick his replacement for Powell’s governor seat and reshaping how many Trump appointees would be represented among the board’s seven members.
The politics around the Powell decision are tied to a Justice Department investigation that involved Powell. The report says Tillis had indicated he would block Warsh’s nomination until that investigation was dropped, and that the U.S. Attorney for the District of Columbia, Jeanine Pirro, said on Friday that she was closing the investigation. At a March news conference, Powell had said he wouldn’t leave the Fed’s board until the Trump administration’s investigation was dropped “with transparency and finality,” while Pirro said her office could reopen the investigation if “the facts warrant doing so.”
The report also describes how Tillis framed the closure and the remaining appeal. On Sunday, Tillis told NBC’s “Meet the Press” that he had been assured the appeal was just to challenge the principle behind the ruling, rather than to continue the investigation. Justice Department officials also said the investigation would only reopen if an ongoing probe by the Fed’s inspector general found evidence of criminal conduct. Tillis said, “We worked a lot over the weekend to make sure that we were very clear that we had the assurances from the DOJ that I needed to feel like they were not using the DOJ as a weapon to threaten the independence of the Fed.”
Even with those assurances, Tillis floated the possibility that Powell could stay on for some period after May 15, telling “Meet the Press” that “I suspect Mr. Powell wants to see what happens with the appeal and to make sure that it is fully settled.” That sets up the Wednesday news conference as the moment when Powell could indicate whether he will act on that “some time after May 15” idea—or choose to step away entirely.
White House officials also weighed in on whether the administration would oppose any decision by Powell to remain. On Monday, White House press secretary Karoline Leavitt was asked if President Trump would oppose Powell staying on the Fed board. She responded, “I think the president will be satisfied once Kevin Warsh is confirmed as the Fed chair,” which the report reads as an indication that the president would not seek to fire Powell, despite earlier threats.
Powell, for his part, reiterated a degree of discretion. The report says Powell last month indicated that even if the investigation was dropped he wouldn’t necessarily leave the board, adding, “I will make that decision based on what I think is best for the institution and for the people we serve.” The outcome could influence how the board’s internal dynamics play out as Warsh, if confirmed, takes over the chair role.
Beyond the leadership politics, the AP report places the transition in the context of an economy described as “unusually murky” for the Fed. Inflation has risen to 3.3%, a two-year high, with the Iran war pushing gas prices higher, which the report says makes it harder for the central bank to reduce rates. At the same time, the report says the unemployment rate declined in March and the number of people seeking unemployment benefits remains low, suggesting the job market may be stabilizing after earlier signs of weakness.
Fed policymakers were nearly certain, according to the report, to leave their key rate unchanged at about 3.6% on Wednesday. The direction of rates after that meeting may depend on whether inflation pressures cool and whether the labor market continues to stabilize enough to reduce the urgency for cuts. The report also notes that a key shift economists would watch is how the Fed’s statement language changes—specifically whether it signals that the next move could be either a rate cut or a hike. Right now, the statement indicates that any change to the key rate would be a cut, and minutes from the March meeting show that many of the 19 participants supported considering a hike, though it was unlikely to be a majority.
The report adds that Warsh, if confirmed, has argued for rate cuts previously but would likely have limited ability to reduce rates immediately because most policymakers have signaled they would prefer to wait and evaluate the war’s impact on the economy. It also highlights that Christopher Waller, a key Fed board member, voiced concerns earlier this month that rising inflation could mean the Fed would have to stand pat this week, and he suggested that with unemployment still low at 4.3%, rate cuts might not be necessary soon.
The leadership transition, in other words, is unfolding alongside a policy debate shaped by competing data—prices running hot enough to complicate cuts, and labor indicators that remain steady enough to blunt the case for urgency. The Wednesday news conference by Powell, along with the Senate Banking Committee’s vote on Warsh, is set to determine how the Fed’s membership and signaling evolves at a moment when even small shifts in the statement language could signal whether the next rate move stays biased toward cuts or opens the door to hikes.