[The Journal] Jerome Powell’s Last Stand at the Fed

A new chairman is taking over from Jerome Powell at the Federal Reserve. But Powell isn’t leaving. He plans to stay on as a voting member on the Fed’s board of governors — a decision that has sparked significant controversy inside Washington.

Powell’s tenure as Fed chair has been defined by extraordinary challenges — from navigating a global pandemic to fighting the worst inflation the United States had seen in four decades. His record at the central bank will be debated for years to come.

The decision by Powell to remain on the board of governors is unprecedented in its political sensitivity. Typically, departing Fed chairs step aside entirely. By staying, Powell retains a vote on monetary policy — the very policy his successor will be trying to shape.

So what does this mean for the independence of the Federal Reserve? Critics argue that Powell’s continued presence could cast a shadow over the new chair’s ability to set the agenda and maintain credibility with financial markets.

There’s also the question of political pressure. The White House has been vocal about wanting the Fed to cut interest rates. Powell, during his chairmanship, pushed back against that pressure, insisting on the Fed’s autonomy. Whether he continues to do so as a governor — sitting at the same table as his successor — remains to be seen.

The Federal Reserve’s mandate is to promote maximum employment and maintain stable prices. As leadership transitions, the big question for Wall Street and Main Street alike is whether the new chair — and a board that now includes the old one — can stay the course on that dual mission without being pulled into political crossfire.