Updated on: April 29, 2026 / 6:04 PM EDT / CBS News
Federal Reserve Chair Jerome Powell said Wednesday he plans to remain on the Fed’s Board of Governors after his chairmanship ends in May, announcing the decision after the central bank left its benchmark interest rate unchanged amid rising inflation tied to the war in Iran.
Powell had previously said he would stay on as chair until the Department of Justice concluded an investigation into his oversight of renovations at the Fed’s Washington headquarters, calling the probe politically motivated. On April 24, the U.S. Attorney for the District of Columbia said her office would end the inquiry. “I’m waiting for the investigation to be well and truly over with transparency and finality,” Powell said at a press conference when asked when he would leave his post as a governor.
Capital Economics noted it is the first time since 1948 that a Fed chair has chosen to remain as a board governor after the term as chair has expired.
Powell expressed concern about threats to the Fed’s independence amid political pressures, including President Trump’s attempt to remove Fed Governor Lisa Cook and a pending Supreme Court decision on whether a president has that authority. “The institution is battered — we have had to go to the courts. It’s not over,” Powell said, stressing that monetary policy should be set without political considerations. “You want people to make monetary policy and set interest rates to benefit the general public, and focus only on that and ignore political considerations. This isn’t bipartisan — it’s nonpartisan.”
President Trump reacted on Truth Social, mocking Powell: “Jerome ‘Too Late’ Powell wants to stay at the Fed because he can’t get a job anywhere else — Nobody wants him.”
Bankrate analyst Stephen Kates said Powell’s decision underscores a commitment to preserving Fed independence, calling it “a bold departure from the norm” that signals he will face political and legal pressure directly.
On policy, the Fed left the federal funds rate in a 3.5%–3.75% range. The decision was widely expected; the CME FedWatch tool showed investors priced a 100% chance of no change. In its statement, the Federal Open Market Committee cited high uncertainty about the outlook because of developments in the Middle East and said “elevated” inflation is connected to recent increases in global energy prices.
Kevin Warsh, President Trump’s pick to replace Powell when his chair term ends on May 15, will take over a central bank balancing calls for lower rates from the White House against an inflation reading that rose to its highest level in almost two years. Many economists now predict the Fed will delay rate cuts until later in 2026 or 2027 because cutting too soon could rekindle inflation.
Moody’s Ratings chief credit officer Atsi Sheth said the Fed’s choice to hold rates reflects rising inflation risks from the Middle East conflict even as near-term growth risks remain contained. The FOMC reiterated its 2% inflation goal; the Consumer Price Index was 3.3% in March. Powell said the current rate gives the Fed flexibility and that “nobody is calling for a hike right now,” adding, “We feel we’re in a good place to move in either direction.”
Four FOMC members dissented from the statement. Fed Governor Stephen Miran voted for a 0.25 percentage-point cut. Three others backed keeping the rate but opposed language suggesting a bias toward lowering rates. Brian Coulton, Fitch Ratings’ chief economist, noted the debate over a line in the press release about “considering the extent and timing of additional adjustments,” which some members did not support given the oil price shock.
Powell described the economy as facing an “unusually difficult situation” because of multiple supply shocks — the pandemic, Russia’s invasion of Ukraine, tariffs, and now the Iran conflict and oil spike. “Every supply shock has the capability of driving inflation up and unemployment up. The central bank has a really hard time deciding what the right thing is to do,” he said.
Since the Iran war began Feb. 28, global energy costs have risen, driving the U.S. average gasoline price to about $4.23 per gallon on Wednesday — roughly $1.25 higher than before the conflict. Economists forecast April’s inflation could jump to about 3.9% annually due to fuel price increases, according to FactSet. Oxford Economics warned higher oil prices will reduce real disposable income growth and weigh on spending for durable goods and discretionary services, which could hurt overall economic growth, since consumer spending accounts for roughly 70% of U.S. GDP.
So far the U.S. economy remains resilient, Powell said, but the Fed is monitoring whether higher energy costs prompt consumers to cut back on spending.
The central bank is also watching labor-market signals, which have softened amid uneven payroll gains and the rise of artificial intelligence. Some firms have announced large layoffs citing AI, though economists do not see widespread job losses yet. Powell described the labor market as relatively balanced but acknowledged younger college graduates face challenges finding work.
Ameriprise chief market strategist Anthony Saglimbene noted that any change in how the Fed describes labor conditions — particularly wage pressures and hiring demand — could affect expectations for future rate policy.
Edited by Alain Sherter
In: Jerome Powell; Interest Rates; Federal Reserve