Why Powell Is Likely To Stick Around At The Fed

The odds just went up that Jerome Powell will stay at the Federal Reserve until January 2028. And President Donald Trump — who has long wanted to see Powell gone — is the main reason.

The Fed’s inspector general found Wednesday that the central bank’s massive headquarters renovation project, while poorly managed, didn’t involve criminal violations or other misconduct by Powell or his colleagues. That means Trump would have a harder time using the report as grounds to try to remove the former Fed chief, who is now just a regular member of the Board of Governors.

Paired with a recent cooling of temperatures between the president and the Fed — Trump’s pushback against the central bank’s interest rate hike this month was relatively muted — the findings might have been an opening for Powell to leave in the coming months. After all, he made it clear earlier this year that the only reason he was staying was legal threats against him and the Fed more broadly.

But Trump, who has aggressively pressed the central bank to cut interest rates ever since he returned to the White House, didn’t offer any closure. Instead, the president, in a social media post, said he has asked Attorney General Todd Blanche to “make a determination as to what to do” about the cost of the project.

“This is Jerome Powell’s fault, and he should be forced to resign, IMMEDIATELY!” Trump wrote. “If he doesn’t resign, he should be sued, at the highest level, by the United States Government, for either corruption or incompetence, both of which are completely unacceptable.”

Why does all this matter? If Trump attempts to fire Powell over the central bank’s failure to rein in construction costs, it would revive questions about the durability of Fed officials’ protection from removal by presidents dissatisfied with their monetary policy decisions. Powell’s board term runs out at the end of January 2028.

Sources in Trump’s orbit had varying takes on what his social media post bodes, though one thing is obvious: He still really hates Powell, who did not dramatically lower borrowing costs as the president wanted.

A former senior Trump official said the president is trying to save face after the report didn’t give him the ammunition he wanted.

One person close to the White House said the president still wants to fire Powell.

“Will he? I doubt it,” the person said. “He is being told the courts will not allow it.”

Another important constituent that might not take Powell’s dismissal well: the bond market, which is already sending long-term rates on U.S. government debt to more than two-decade highs.

Of course, the threat of a removal attempt is implied, and hardly theoretical, given that Trump already tried to fire Fed board member Lisa Cook (though he has not done so a second time after the Supreme Court told him to go back to the drawing board). Still, it’s not clear he would succeed.

There’s also another problem for Trump: Even if he were able to fire Powell — or the former Fed chief decided to leave — he could lose Congress in the meantime.

“If the Democrats win the Senate in November, he’s not going to get any nominee through,” said Mark Spindel, chief investment officer at Potomac River Capital and co-author of a book on Fed independence.

Senior Republican senators said they were not surprised to see the watchdog report clear Powell.

“The chairman of the Fed — like the president of the United States — cannot possibly be digging down into the bowels of these decisions,” said Sen. Thom Tillis (R-N.C.), who is retiring from Congress after this year. “And yet, they had the audacity to say it was up to criminal-level behavior, which has obviously been disproven.”

“Not a surprise,” said Sen. John Cornyn (R-Texas), who is also departing. “Much hullabaloo over nothing.”

“I think Jay Powell’s an honorable man,” Cornyn added. “And I guess he’ll stay on the Federal Reserve for a while but then transition off.”

Megan Messerly and Jasper Goodman contributed to this report.