Federal Reserve Chair Jerome Powell declared on Wednesday that he will remain at the helm of the central bank on an interim basis if his nominated successor Kevin Warsh is not confirmed by the Senate before his term expires in May. The announcement came during a press conference following the Federal Open Market Committee's widely expected decision to hold interest rates steady at 3.5 to 3.75 percent.
THE PRO TEM PRECEDENT
Powell invoked a provision of the Federal Reserve Act that requires the Board of Governors to elect a member to act as "chairman pro tempore" when both the chairman and vice chairman are unavailable. He said he would fill that role himself if Warsh had not been confirmed by then, noting that the Fed had done so "on several occasions", including once involving him.
The Fed chair went further, revealing that he has no intention of vacating his separate seat as a member of the Board of Governors — a position he can hold until early 2028 — until the Justice Department investigation is "well and truly over". Asked whether he would remain a governor once his term as chair ends and the investigation is over, Powell said: "I have not made that decision yet," adding that his choice would depend on what he believes is best for the institution and the public.
WARSH CONFIRMATION IN LIMBO
The confirmation of Kevin Warsh, the former Fed governor chosen by President Donald Trump to succeed Powell, has been effectively frozen by Republican Senator Thom Tillis of North Carolina, who has stated publicly that he will block the nomination until the Justice Department's probe concludes. Because Republicans hold a 13-11 majority on the Senate Banking Committee, where Tillis sits, his opposition is enough to stall the nomination in committee.
Last week, US District Judge James Boasberg quashed grand jury subpoenas connected to the criminal investigation into Powell, ruling that the Justice Department lacked a legitimate basis for the demands. In his opinion, Boasberg wrote that "a mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning." The Justice Department asked Boasberg on March 16 to reconsider the ruling.
THE RATE DECISION ITSELF
Wednesday's monetary policy decision was the second consecutive hold by the FOMC in 2026, following three quarter-point cuts that closed out 2025. The committee voted 11 to 1 to maintain the current rate, with Governor Stephen Miran casting the lone dissent in favour of a 25-basis-point reduction. Governor Christopher Waller, who had sided with Miran at the January meeting, moved back into the majority this time.
The accompanying statement acknowledged heightened uncertainty from the conflict in Iran, noting that "the implications of developments in the Middle East for the US economy are uncertain." Updated projections showed the median FOMC member still expects one rate cut in 2026 and one in 2027, though seven of 19 participants see no rate cut this year, the same number as in December. The longer-run neutral rate estimate edged up to 3.1 percent from 3.0 percent.
WHAT COMES NEXT
The FOMC's next meeting is scheduled for April 28 and 29, which under the current timeline would be Powell's final gathering as chair. Powell will preside over that meeting as chair; whether he stays on as chair pro tem after May 15 depends on the pace of Warsh's confirmation, whose hearing has yet to be scheduled.
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