Powell blocks Trump's second Fed pick by staying on board until 2028

Jerome Powell's decision to remain a Fed governor after his chairmanship ends blocks the Trump administration from filling a vacant board seat.

White House economic adviser Kevin Hassett publicly criticized Jerome Powell for staying on the Federal Reserve Board of Governors, a move that prevents President Donald Trump's administration from nominating a replacement to the seven-member panel.

"Jay Powell did not step down — this is extremely unusual, a former chair still sitting there, a very abnormal situation," Hassett, director of the White House National Economic Council, said April 30.

Powell's four-year term as chair expires in May 2026, but his term as a governor runs through January 2028. Kevin Warsh has already been confirmed as Powell's successor in the chair role. By staying on the board, Powell prevents the administration from filling what would otherwise be an open seat, limiting Trump to one appointment instead of two.

The clash adds a new dimension to the Fed's governance at a time when the central bank is navigating its policy path. Each board member holds a vote at every Federal Open Market Committee meeting, meaning Powell's continued presence could influence monetary policy decisions for nearly two more years.

The criticism marks an escalation in the long-running tension between the Trump administration and the Fed chief. Hassett himself was reportedly considered a leading candidate for the Fed chair position earlier in 2026 before ultimately staying at the NEC.

Powell has also faced a Justice Department probe and an inspector general review connected to renovations of Federal Reserve buildings that cost more than $2.5 billion. He has consistently defended the Fed's independence, and his decision to remain on the board could be interpreted as a statement that governors should not vacate their seats based on political convenience.

The chair position and the governor position are technically separate under the Federal Reserve Act. Powell's four-year term as chair expires, but his 14-year term as a governor runs through 2028. Legally, he is well within his rights to stay. Hassett's public expression of disappointment is a notable escalation in what has been a long-running tension between the Trump administration and Powell.

With Warsh confirmed as the incoming chair, markets have already begun pricing in whatever policy shifts his leadership might bring. But Powell occupying a board seat means the administration gets one fewer opportunity to shape the committee's composition during this political cycle. If Powell were to be removed or pressured out, it could signal a loss of Fed independence, potentially weighing on bond markets, weakening the dollar and increasing volatility expectations for equities and rates.

The last time a former Fed chair remained on the board after their chairmanship ended was in the 1970s, when Arthur Burns stayed on as a governor after his term as chair expired. That period was marked by high inflation and significant tension between the White House and the central bank — a historical parallel that some economists say is worth watching.

The next FOMC meeting will be the first under Warsh's leadership, and investors will watch closely for any signs that the board's internal dynamics have shifted.

This article is for informational purposes only and does not constitute investment advice.