Chairman of the United States, Federal Reserve, Jerome Powell has vowed not to resign following the presidential victory of Donald Trump.
Jerome Powell was appointed by Donald Trump in 2018 before eventually clashing with him during the Republican president’s first term. He currently oversees America’s monetary policy.
He is expected to remain in charge during the first critical months of the new administration as he recently stated the President-elect had no authority under law to remove the head of the Fed, a position confirmed by the Senate, over a policy disagreement until the end of his tenure as Fed. Reserves chair in 2026.
Powell’s Tenure as Federal Reserves Chair
In November 2017, President Donald Trump nominated Powell to serve as Federal Reserve chair, replacing Janet Yellen. In December of that same year, the Senate committee on the Central Bank approved Powell’s nomination in a 22–1 vote, with Senator Elizabeth Warren being the only dissenting voice. Jay Powell’s nomination was confirmed by the Senate on January 23, 2018, by an 84–13 vote.
Powell officially assumed office on February 6th, 2018, and one of his first actions was to continue to raise US interest rates, as a response to the increasing strength of the US economy. He also announced plans to reduce the Federal Reserve’s asset portfolio from US$4.5 trillion to a range of US$2.5–3 trillion over four years in a process he called quantitative tightening which he would later abandon in 2019.
The impact of this quantitative tightening brought Powell heads-on with Trump who called the Fed’s policies reckless and labeled Powell an “enemy.” In early 2020, Powell launched an unprecedented series of actions to counter the financial market impact of Covid-19 which included a dramatic expansion of the Fed’s balance sheet and introduction of new tools, including the direct purchase of corporate bonds and direct lending programs. This drew praises from Americans including from Trump.
However, Powell was criticized for using high levels of direct and indirect quantitative easing as asset price valuations hit levels last seen at the peaks of previous bubbles, causing a strain on the American economy and massive economic inequality.
Under Joe Biden in 2021, while responding to widespread high inflation readings, Jerome Powell indicated an increase in the speed of tapering asset purchases, namely up to $30 billion per month. Despite Elizabeth Warren criticizing Powell for his financial regulation track record and calling him a “dangerous man to head up the Fed’, President Biden re-appointed Powell for a second tenure in 2022.
Historical Precedents of Newly Elected American Presidents and Fed Reserve Chairs
A look into American history reveals that American presidents have generally preferred keeping Federal Reserve chairs on assumption of office.
Since 2000, Fed. Chairs like Alex Greenspan, Ben Bernanke, and Jay Powell himself have served under two or more presidents with Alex Greenspan Serving under four different presidents.
It therefore looks like Trump might have to wait until Powell’s tenure as Federal Reserve chair elapses in May 2026 before he would be able to install a new Federal Reserve chair.
