Jerome Powell stepped down as chair of the Federal Reserve on Friday, concluding an eight-year tenure defined by a volatile economic cycle that began with near-zero interest rates and ended with borrowing costs at a two-decade high. Powell has been named chair pro tempore until Kevin Warsh, President Donald Trump’s nominee to succeed him, is sworn in. Powell said he will continue serving on the Fed’s governing board until he is certain the central bank’s independence has been fully restored.
When Powell took office eight years ago, economists feared inflation and interest rates were too low and that job growth was insufficient. The U.S. economy has since undergone a sharp transformation. Inflation surged after the pandemic and has stayed above the Fed’s 2% target for more than five years, making housing, vehicles, and groceries harder to afford for many households. Overall consumer prices are now 27% higher than they were six years ago. Groceries are 30% more expensive than they were six years ago, compared to a 3.6% rise in the six years before the pandemic.
The Federal Reserve’s initial response to the pandemic focused on crisis support. In two moves during March 2020, the central bank slashed its benchmark interest rate by 1.5 percentage points to near zero. The Fed simultaneously purchased large volumes of Treasury debt and government-backed mortgage securities to stabilize credit markets. In April 2020, Powell stated the Fed would “continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery.”
Federal, Trump, and Biden administrations also injected roughly $5 trillion into the economy through stimulus checks and small-business aid. That spending collided with global supply chain disruptions, and the Fed kept rates near zero until March 2022, when inflation reached 6.9% by the central bank’s preferred measure. Powell and most economists initially labeled the price surge “transitory,” attributing it to pandemic-related factory closures and port delays.
“Even though there was all the evidence there in the data that aggregate demand was going through the roof, they still said it was a transitory supply shock,” said Mickey Levy, a former top economist at Bank of America and a visiting fellow at the Hoover Institution. “The Fed contributed to that inflation and completely misread the tea leaves.”
Once inflation spread into persistent categories like apartment rents, Powell directed the sharpest interest rate increases since the early 1980s. The aggressive tightening succeeded in lowering inflation to 2.3% by September 2024 without triggering a recession or sharply raising unemployment. Prices subsequently moved higher again after the Trump administration imposed sweeping tariffs in April 2025.
Powell’s early tenure emphasized maximum employment, a focus some analysts said delayed the inflation response. In an August 2021 speech, he pointed to a 5.4% unemployment rate as a reason against premature rate hikes. Julia Coronado, president of MacroPolicy Perspectives and a former Fed economist, defended that approach. “If you can actually push a little harder for a little longer with no consequences for inflation, then you should damn well do it,” Coronado said. “He was absolutely right about that. He’s still right about that.”
Powell has repeatedly pushed back against accusations that employment policy drove the inflation spike, calling it a global phenomenon. In late April, he told reporters that “overweighting the employment market” had nothing to do with the surge. “It was a global shock that happened essentially very, very similarly all over the world,” he said.
Defending the Fed’s autonomy from day-to-day politics emerged as a defining element of Powell’s leadership. Last July, Powell corrected Trump on camera regarding the cost of the Fed’s $2.5 billion building renovation, using his reading glasses to dispute a higher figure the president presented. More recently, Powell faced an unprecedented Justice Department investigation into the central bank, which he publicly challenged in January. Research by University of Maryland economist Thomas Drechsel shows Powell met with senators more than twice as often as his two predecessors, splitting meetings evenly between parties. That outreach proved critical when North Carolina Republican Sen. Thom Tillis blocked Warsh’s confirmation until the Justice Department dropped its probe into the building project.
“Even though there were policy disagreements, the big plus is the way he has protected central bank independence,” said Don Kohn, a former Fed vice chair. “That is the most important thing for the future of the Federal Reserve and for protecting the public interest in having an independent central bank.” David Wilcox, a senior fellow at the Peterson Institute for International Economics, agreed, noting that in an “extremely challenging context, he’s performed exceedingly well” and that “the country has been lucky indeed to have him as chair.”
Powell, 73, is a lawyer and former finance professional who joined the Fed’s board of governors in 2012 rather than coming from a traditional economics background. Unassuming in public, Powell often introduces himself as “Jay” and has displayed his guitar-playing skills at the Fed’s holiday parties. He has not specified when he might fully leave the governing board, though his term runs until January 2028. At his final news conference as chair, Powell underscored his commitment to a nonpartisan mandate. “You want people to … set interest rates to benefit the general public,” Powell said, “and focus only on that and ignore political considerations. This isn’t bipartisan, this is nonpartisan.”