Powell to remain as governor at Fed UPDATE 2-Powell to remain at Fed amid legal 'battering' by Trump administration

Federal Reserve Chair Jerome Powell plans to stay on as a central bank governor for an undetermined period of time when his leadership term ends next month, amid hopes that ongoing political attacks on the institution will settle down.

"After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined," Powell told a news conference Wednesday after his last policy meeting as chair.

"I'm not looking to be ... a high-profile dissident or anything like that," the central bank chief said. He said he wants to see that the political climate that led to unprecedented legal attacks on the central bank has "calmed down" and the Fed can be more focused on its core mission.

In effect, he reiterated a pledge he made after the Fed's March 17-18 policy meeting, when the central bank was still in the thick of legal challenges from the Trump administration.

"I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors," Powell told reporters.

Since that meeting, some of the legal uncertainty was resolved.

U.S. Attorney for the District of Columbia Jeanine Pirro last week seemingly ended a U.S. Department of Justice criminal probe into cost overruns at the Fed's headquarters in Washington. Powell fought the probe in January and said the inquiry was punishment for not giving in to President Donald Trump's demands for big interest rate cuts.

In closing the investigation, Pirro deferred to an ongoing probe by the Fed's inspector general, the central bank's in-house watchdog. That move cleared a roadblock in the Senate Banking Committee for Kevin Warsh, Trump's nominee who seeks confirmation to succeed Powell as Fed chief on May 15.

However, Powell noted Pirro said she "would not hesitate to restart the investigation."

Powell's separate term as a member of the Fed board of governors extends through January 2028. By remaining on the board, Powell could band together with other policymakers to try to ward off further attempts by Trump and his supporters to pressure the central bank.

Warsh is an aggressive critic of the Fed. He also backtracked on his long-running hawkish monetary policy views in favor of supporting the sort of rate cuts the president demanded, a stance that raised questions about his willingness to protect the central bank's independence.

Powell staying on as a board member "bolsters the chance that central bank independence survives the era of economic and political populism," said Joseph Brusuelas, principal and chief economist at consultancy RSM US LP.

Thomas Ryan, North American economist at Capital Economics, said Powell's presence also might have a monetary policy effect given that Fed board member Stephen Miran, who relentlessly supported rate cuts, likely will have to leave. Powell "shifts the FOMC's composition in a more hawkish direction and complicates incoming Chair Kevin Warsh's already difficult task of delivering near-term rate cuts," the analyst wrote.

On Fox Business Network, Treasury Secretary Scott Bessent criticized Powell's decision.

"This is a violation of all Federal Reserve norms," Bessent said. "I think it is an insult" to Warsh and current officials like Michelle Bowman and Christopher Waller "to think that these other Republican nominees do not care about the institution of the Fed, and that (Powell) alone can maintain the integrity of the Fed," he said.

Top Democrats on the Senate Banking Committee warned that the Fed is not out of legal jeopardy because Pirro's stance "leaves the door wide open" for a relaunch of the criminal probe and doesn't do anything to stop "future baseless investigations" into Powell or other Fed officials if such a move were "politically expedient."

Also unresolved is Trump's attempt to fire Fed board member Lisa Cook, a case that is now in the hands of the U.S. Supreme Court. A Trump victory in that case would imperil other Fed officials the president targeted.

It is also unclear when the Fed's inspector general will report back on its work, which Powell requested last summer. Republican Sen. Tim Scott, who chairs the banking panel, invited the inspector general to share the findings in three months.

Trump relentlessly criticized the Fed during both of his White House terms, though his actions since returning to office last year were far more aggressive. The president, who selected Powell to lead the Fed in 2017, repeatedly threatened to fire him for failing to give in to demands for rate cuts.

"We've been successful so far" in defending the Fed, Powell noted, but none of this "is concluded yet."