Everyone wants to know: is Jerome Powell stepping down? Honestly, if you’ve looked at the headlines lately, it feels like a political thriller. Between the Department of Justice opening probes and the White House lobbing insults, the future of the world’s most powerful central banker is a bit of a mess.
Here is the short answer. No, he hasn't quit yet. But the clock is ticking loudly.
Powell’s second four-year term as Chair of the Federal Reserve is officially set to expire on May 15, 2026. That date is the big one. While there has been an intense amount of drama, including a criminal investigation by the DOJ over Fed building renovations, Powell has signaled he is staying put until his time is up.
The Current Standoff: Powell vs. The White House
Right now, we are seeing something pretty much unprecedented in modern American history. President Donald Trump, who is back in the White House for his second term, hasn't exactly hidden his frustration with "Jay" Powell. He's called him everything from "incompetent" to a "stubborn moron" in the last few months.
Basically, the tension comes down to interest rates. Trump wants them lower—fast. Powell and the Fed have been much more cautious, moving at a "wait-and-see" pace to keep inflation from spiking back up.
The drama hit a fever pitch just a few days ago, on January 11, 2026. Powell revealed he’s being investigated for "abuse of taxpayer dollars" related to a $2.5 billion renovation of the Fed’s headquarters. It sounds like a scene from a movie. Powell’s response? He basically told the public that the investigation is a "consequence" of the Fed refusing to bow to political pressure. He’s digging in his heels.
Trump said on Wednesday, January 14, 2026, that he has "no plan" to fire Powell right this second, despite the probe. But he also called it a "holding pattern." It's a high-stakes game of chicken.
When does Jerome Powell actually leave?
To understand if Jerome Powell is stepping down, you have to look at the two different hats he wears.
- The Chair Term: This is his leadership role. It ends May 15, 2026.
- The Governor Term: This is his seat on the Board of Governors. That doesn't expire until January 31, 2028.
Technically, even if a new Chair is named in May, Powell could stay on the board as a regular governor for another two years. Most Fed chairs don't do that. It’s kinda awkward to stay in the room when your replacement is running the meeting. But given how much Powell is emphasizing "Fed independence," some analysts think he might stay just to make a point.
Who is on the shortlist to replace him?
The "Who's Next?" game is already in full swing. Treasury Secretary Scott Bessent reportedly handed a shortlist to the President back in late 2025. Trump has even publicly narrowed it down.
He’s mentioned "The Two Kevins" as his favorites:
- Kevin Warsh: A former Fed governor who is very close to Trump. He’s known for being a bit of a hawk but also a supply-side enthusiast.
- Kevin Hassett: Currently the National Economic Council Director. He’s a big-time loyalist and has been very vocal about wanting rate cuts.
Other names floating around include Michelle Bowman (the current Vice Chair for Supervision) and Christopher Waller. Even Rick Rieder from BlackRock has been mentioned.
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Can the President just fire the Fed Chair?
This is the billion-dollar question. The law says the President can remove a Fed governor "for cause."
What does "for cause" mean? It’s not just "I don't like his interest rate policy." It usually means legal or ethical misconduct. That’s why that DOJ investigation into the building renovations is so significant. If the DOJ finds actual fraud or "gross negligence," it gives the White House the legal lever they need to try and remove him before May.
Without a conviction or a massive scandal, firing him would likely end up in the Supreme Court. That would create a level of market chaos that nobody—not even a President who wants lower rates—really wants to deal with.
Why this matters for your wallet
If you’re wondering why you should care about a 70-something-year-old banker’s job security, look at your mortgage or your credit card bill.
The Fed Chair is the person who essentially decides how much it costs you to borrow money. If Powell steps down early, or if his successor is seen as "too political," the markets could freak out. If investors think the Fed is just doing whatever the White House says, they might demand higher interest rates on government bonds to compensate for the risk of inflation.
That could actually drive your borrowing costs up, even if the Fed is trying to push them down. It's a delicate balance.
What happens next?
Expect things to get noisier as we approach the spring.
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The Senate has to confirm whoever Trump picks to replace Powell. With the DOJ investigation ongoing, that confirmation process is going to be a total circus. Some Republican senators have already started "breaking ranks," saying they don't want to see the Fed's independence destroyed.
For now, Powell is still the man in the big chair. He’s giving speeches, he’s voting on rates, and he’s fighting a legal battle on the side.
Actionable steps to watch:
- Watch the May 15 deadline: This is the most likely date for a transition.
- Monitor the DOJ probe: If "gross negligence" is mentioned in a formal filing, Powell’s exit might happen much faster than May.
- Follow "The Two Kevins": If Kevin Hassett or Kevin Warsh starts doing more high-profile interviews, you're likely looking at the next Fed Chair.
- Check the 10-year Treasury yield: If it starts climbing despite Fed talk of cuts, the market is getting nervous about the political drama.
Jerome Powell isn't stepping down today. But the bridge to May 2026 is looking more like a tightrope every single day.