May 15th has long been a red-letter day in the teeming imagination of Donald Trump. Almost as soon as his inauguration was over and done with, he began repeating the date as a totem that would free him from Jerome “Jay” Powell.
The intransigent and unflappable chairman of the Federal Reserve – the United States’ central bank – has remained impervious to all of the president’s ploys – the early cajoling, the insistence, the taunts and nicknames and, finally, the legal threats, as Trump became increasingly obsessed with Powell’s refusal to lower interest rates to suit his administration’s economic agenda. The relationship remains icy even as Powell, a Washingtonian blue blood, prepares to take leave of his office.
January of this year was arguably the most frantic month of activity in an administration that has operated on a hyperactive level. It was easily overlooked, but in those frozen weeks dominated by the street-shootings by Ice officers in Minneapolis, the raid on Venezuela and threats of taking Greenland by force, which so appalled European allies, the US department of justice served the Federal Reserve with grand jury subpoenas.
The threatened criminal indictments revolved around Powell’s testimony to the Senate’s banking committee in June 2025, when he was grilled about the massive overhaul of the Federal Reserve building on Constitution Avenue, the costs of which are running to $2.5 billion.
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Trump had frequently expressed his incredulity at the figure. On a sweltering afternoon last July, the president and the Fed chairman toured the building together. Both men wore suits and white hard hats as they stood in a room under construction. It was an unintentionally comical sight but there was no laughter.
Trump sought to inflate the costs with the cameras rolling, hoping to maximise Powell’s discomfort. “It’s looking like 3.1 billion- it went up a little bit, or a lot,” the president said as Powell, shooting a look of surprise, shook his head. “I’m not aware of that, Mr President,” he replied. Trump produced a folded piece of paper from his breast pocket which Powell examined before handing it back to him dismissively, telling him that he was including, in that price, the cost of the Martin building, a renovation that had been completed five years ago.
“It’s part of the overall work,” Trump continued, looking ahead.
“It’s not new,” Powell insisted.
They looked like a pair of cranky ageing house mates squabbling over whose turn it was to take out the bins. But the moment was instructive. Powell (73) has found within himself a reserve of steely hauteur to deal with Trump’s pressures. So, when last January’s subpoenas were issued, he gave an on-camera statement of his own.
“This new threat is not about my testimony last June or about the renovations of the Federal Reserve buildings. It is not about the Congress’s oversight rule. The Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than serving the preferences of the president.
“This is about whether the Fed will continue to be able to set interest rates based on evidence in economic conditions or whether, instead, monetary policy will be directed by political pressure or intimidation.”
The legal threats caused disquiet within the world of finance and on both sides of the aisle in Congress. JP Morgan CEO Jamie Dimon was among those who advocated on his behalf, telling reporters in a quarterly earnings call update that although he didn’t always agree with the Fed’s every decision, he has “enormous respect for Jay Powell, the man”.
Powell had served under four administrations: as treasury undersecretary in the George Bush White House and on the board of the Federal Reserve in the Obama era before Donald Trump, to his lasting regret, appointed him as chairman in 2019 – a role he continued to hold through the Biden administration.
Chosen successor
The process of nominating Kevin Warsh, Trump’s chosen successor to Powell, was blocked by Republican senator Thom Tillis, who made it clear he would not approve any federal nominee until the charges were dropped. It was, by Republican congressional standards, a bold defiance of the White House. But Tillis will not seek reelection once his term ends in January 2027 and he was free to act according to his principles.
In late April, Jeanine Pirro, the attorney general announced that the case would be dropped.
“They have made it very clear that the current investigation is completely and fully ended,” Tillis said in greenlighting the pathway for Warsh’s nomination.
But that wasn’t quite true. Earlier this month, Pirro suggested the department of justice might be interested in resurrecting the charges at a future date. That vague insinuation of a future threat prompted Powell to deliver another defiant stance against Trump in his final press conference as Federal Reserve chairman.
Predictably, he said that the Fed would hold interest rates at 3.5-3.75 per cent – for the third successive time. But he also confirmed his intention to use his option to remain on the board of the Fed as a governor, a position he can hold until January 2028, even after he relinquishes his role as chairman. The decision was highly unusual – the last chairman to do so was Marriner Eccles, in 1948.
Treasury secretary Scott Bessent criticised the decision as a “violation of all Federal Reserve norms”. Trump, feigning indifference, took to social media to declare that “Jerome ‘Too Late’ Powell wants to stay at the Fed because he can’t get a job anywhere else – nobody wants him”.
Powell himself made it clear he is staying on because he fears for the integrity and independence of an institution he has steered for 14 years.
“I will leave when I think it is appropriate to do so,” he said.
“I’m literally staying because of the actions that have been taken. I had long planned to be retiring and the things that have happened in the past three months have left me no choice but to stay and see them through for at least that long.
“My concern is really about the series of legal attacks on the Fed. This has nothing to do with verbal criticism by elected officials. But these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats of additional actions. I worry that these attacks are battering the institution.”
The idea that Powell stuck around because he couldn’t “get a job anywhere else” is amusing. His net worth, estimated at anything between $20 million and $50 million, renders his Fed salary of $250,000 an irrelevance.
Powell rose from the mid-century Washingtonian gilded class, following his father into law through the hallowed corridors – Georgetown Prep; Princeton; Georgetown Law, followed by a steady ascent through investment banking as that financial sector ballooned in wealth and influence through the 1980s and 1990s.
Through it all, Powell has remained distantly cordial and almost unknown. He is a Republican who lives in Chevy Chase, the affluent Maryland suburb north of Washington DC and, like many baby boomer era collegiate Americans, he has retained an unshakeable devotion to the Grateful Dead. His world could not have been more different from the bare-knuckle game of New York construction through which Trump carved his reputation and name. And it is easy to discern, in that clip where they inspect the Fed building under renovation, the financier’s hauteur and indifference to the self-styled construction guy turned political phenomenon.
Tenure
Opinion as to the merits of Powell’s terms as Fed chairman are split broadly, and bitterly, along partisan lines. Although his tenure was defined by the lowest employment rate of any previous chairman since 1978, it was also characterised by the third-highest rate of inflation.
The chief criticism levelled against him was that he reacted sluggishly – or over cautiously – in taking measures against the supersonic rates of inflation as the US economy bounced back from the Covid-era cold storage. Throughout 2021, Powell insisted that the rapid rates of inflation were caused by temporary supply issues, which would level out. Despite loudening warnings that the Fed needed to intervene, Powell’s board declined to raise the federal funds rate from zero until March of 2022.
Inflation became the key election issue in 2024, arguably dooming the feeble Biden/Harris ticket irrespective of its calamitous shortcomings. A sufficient number of pinched voters listened to Trump’s promise to bring prices down to complete his stunning renaissance as a second-term president. Unfortunately for them, and him, he has not been able to do so – hence his impatience with Powell for not lowering borrowing costs.
The task of the Fed has been further complicated by having to factor in the wild unpredictability on the Trump administration’s tariff war with the rest of the world and, more recently, the on-again, off-again war with Iran.
However, Powell’s role in overseeing that post-pandemic surge in the national level of inflation has not been easy to shake off. The full consequences of those turbocharged years have yet to be fully ascertained but it is already clear that the startling rise in housing and rent costs have upended the lives and inherited expectations of several generations of Americans.
That legacy contributed to Powell earning the label from the Heritage Foundation, the architects of the Project 2025 manifesto, to headline one of its papers, Problematic Powell: What To Do With the Worst Fed Chair In History.
There is a wealth of studies available on what the Fed should or should not have done five years ago. John Cochrane, the prominent Stanford professor at the Hoover Institution, has argued that the inflationary damage was caused by the scale of the government Covid-related support schemes.
“The government essentially sent people $5 trillion with no plans to pay the money back,” he said. “People tried to spend it, driving up prices.
“The Fed eventually raising interest rates made inflation come down a bit faster than it would have otherwise, but it was going to go away on its own anyway. There is no magic momentum to inflation. Stop pushing, and it stops.”
`Sock puppet’
Now, as Powell takes his leave, the spotlight turns to Warsh, recently described by economist and former New York Times columnist Paul Krugman as Donald Trump’s “sock puppet”.
In his testimony before the Senate banking committee, Warsh told Louisiana Republican John Kennedy that “the president never asked me to predetermine, fix, decide on any interest rate decisions in any of our discussions nor would I ever agree to do so”. But Trump didn’t have to. He had already told the world he would be disappointed if Warsh didn’t lower rates at the first opportunity.
More worryingly for those who fear whether Warsh has the spine – or will – to withstand pressure from the White House, he told senator Elizabeth Warren that “the Federal Reserve in recent years has wandered outside of its remit, wandered into other lanes. That’s not something I’m prepared to do.”
A Wall Street veteran who served as a Fed governor from 2006 to 2011, Warsh has already hinted at changes to the Fed’s massive portfolio of government bonds and mortgage-backed securities, what data it uses to assess the economic backdrop and how officials communicate about future policy changes.
Powell has suggested that by remaining on the board, he can offer guidance and advice to the younger man. Warsh takes up the role having amassed a personal portfolio of assets valued at between $135 and $220 million but he inherits a board that is unlikely to immediately submit to Trump’s wish when he chairs his first meeting in June. Of the seven voting governors (including Powell) and four regional Fed presidents, the vote was 8-4 to hold rates steady in April.
Adding to Warsh’s challenges is that the case for rate reductions has become much weaker since the onset of the Iran war. Rising energy prices have pushed inflation sharply higher and fanned fears of a more persistent problem if the conflict does not end soon.
Meanwhile, the assessments on Powell’s legacy come thick and fast this week. His eight years in charge were nothing like as notoriously dramatic as Paul Volcker’s brutal mechanisms to smash high inflation (1979-87) nor cinematically dramatic as Ben Bernanke’s (2006-08) nor boom-y and loose as Alan Greenspan’s (1987-2006). But in an era when the self-appointed masters of the information technology universe cravenly succumbed to Trump’s demands for fealty, and when pillar institutions in education, media and the legal profession have, in many cases, buckled under pressure, Powell’s lonely stand has been viewed by many as quietly magnificent.
In the end, his contribution to this turbulent period in US democracy will be remembered not so much for his economic steerage as for his backbone and unbending principle. The cynics doubt that Kevin Warsh will find the same stony independence. Jay Powell would be the first to say he deserves to be given the chance and he knows that his influence, from now on, will be limited.
“I’m not looking to be, you know, a high-profile dissident or anything like that,” he said in April. “There’s only ever one chair.” – Additional reporting: New York Times
