The Trump administration’s latest attack on the Federal Reserve has stoked expectations that Jerome Powell will stay on the Board of Governors after his term as chair ends in May — setting up the optics of a rival center of influence inside the world’s most powerful central bank, even if Powell doesn’t want it.
That unusual scenario has gained traction after the Department of Justice served the Fed with grand jury subpoenas last week, an unprecedented move viewed widely as an escalation of President Donald Trump’s efforts to influence monetary policy.
It’s far from clear how the legal process will play out and what decision Powell will ultimately make on his future. Those who know Powell say if he does stay on, he would only do so to protect the institution and would have no interest in playing a role as a shadow Fed chair.
But if the legal development does provoke Powell to stay, it would upend Trump’s stated plans to stack the board with officials who support his calls for steep interest-rate cuts. It could also create a powerful counterweight inside the Fed to whomever Trump picks as the next Fed chair.
Fans of Powell and foes of Trump might cheer at that result. But analysts say that outcome might be confusing for investors, making it difficult to parse which policymaker holds sway and which way rates are headed.
“It really would set up, potentially, dynamics of having a ‘two popes’ situation where financial markets and the public may get a little confused about who’s in charge,” said Loretta Mester, former president of the Cleveland Fed.
While Powell has shown no signs that he wants to assume such a role, the very optics of a former Fed chair staying on the board -— especially one with th