Updated April 29, 2026 — Federal Reserve Chair Jerome Powell said Wednesday he will remain on the Fed’s Board of Governors after his term as chair ends in May, a decision he announced as the central bank left its benchmark interest rate unchanged amid higher inflation linked to the war in Iran.
Powell had earlier said he would remain chair until the Justice Department completed 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 announced it would end that inquiry. Asked when he would leave his post as a governor, Powell said he was waiting for the investigation to be “well and truly over with transparency and finality.”
Analysts at Capital Economics noted this is the first time since 1948 that a Fed chair has chosen to continue as a board governor after the chair term expired.
Powell also voiced concern about threats to the Fed’s independence amid mounting political pressure, including President Trump’s attempt to remove Fed Governor Lisa Cook and a pending Supreme Court decision on a president’s authority to oust governors. “The institution is battered — we have had to go to the courts. It’s not over,” Powell said, stressing that monetary decisions should be made free of 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 posted a critical reaction on Truth Social, mocking Powell’s decision and saying, in part, “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 choice underscores a commitment to preserving the central bank’s independence, calling it “a bold departure from the norm” that suggests Powell is prepared to face political and legal pressure directly.
On monetary policy, the Fed left the federal funds rate in a 3.50%–3.75% range, a widely anticipated move: the CME FedWatch tool showed market participants fully priced for no change. In its statement, the Federal Open Market Committee cited elevated uncertainty tied to developments in the Middle East and said recent increases in global energy prices have contributed to higher inflation.
Kevin Warsh, President Trump’s nominee to succeed Powell as chair when the chair term ends on May 15, will inherit a central bank balancing White House calls for lower rates against rising inflation, which hit its highest level in almost two years. Many economists now expect the Fed to delay cutting rates until late 2026 or 2027, warning that acting too soon could reignite inflationary pressures.
Moody’s Ratings chief credit officer Atsi Sheth said the decision to hold reflects the growing inflation risks stemming from the Middle East conflict, even as short-term growth risks appear contained. The FOMC reiterated its 2% inflation objective; the Consumer Price Index was 3.3% in March.
Powell said the current policy rate gives the Fed flexibility, noting “nobody is calling for a hike right now” and adding the committee is “in a good place to move in either direction.” Four FOMC members dissented: Governor Stephen Miran voted for a 25-basis-point cut, while three others opposed language in the statement that they felt implied a bias toward lowering rates. Fitch’s chief economist Brian Coulton pointed to disagreement over wording about “considering the extent and timing of additional adjustments,” which some members found inappropriate amid the recent oil shock.
Powell described the economy as facing an “unusually difficult situation” due to multiple supply shocks — the pandemic, Russia’s invasion of Ukraine, tariffs, and now the Iran conflict and related oil price 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 conflict began Feb. 28, global energy costs have climbed, pushing the U.S. average gasoline price to about $4.23 per gallon on Wednesday, roughly $1.25 higher than before the conflict. Economists expect April’s inflation reading could jump to about 3.9% year over year because of fuel price increases, according to FactSet. Oxford Economics warned that higher oil prices will reduce real disposable income growth and weigh on spending for durable goods and discretionary services, which could drag on overall economic growth given that consumer spending accounts for about 70% of U.S. GDP.
So far, the U.S. economy has shown resilience, Powell said, but the Fed is watching closely to see whether rising energy costs lead consumers to cut back.
Policymakers are also monitoring labor-market signals, which have softened amid uneven payroll gains and early signs that artificial intelligence is changing hiring patterns. Some companies have announced large layoffs citing AI, though economists do not yet see broad-based job losses. Powell described the labor market as relatively balanced overall but acknowledged younger college graduates face tougher prospects finding work.
Ameriprise chief market strategist Anthony Saglimbene noted that any shift in how the Fed characterizes labor conditions — especially wage pressures and hiring demand — could alter expectations about the path of future rate policy.
Edited by Alain Sherter