Federal Reserve faces continuous leadership turmoil! Powell's interim chairman arrangement dissatisfies Trump confidants

Source: Jinshi Data

Chairman Powell's term ended last Friday, and the Federal Reserve has appointed him as interim chairman until Walsh is sworn in. Two board members nominated by Trump publicly opposed the indefinite arrangement, demanding a clear term ranging from one week to one month.

The Federal Reserve Board announced last Friday the appointment of Powell as interim chairman. This arrangement is consistent with customary practices during previous transitions between chairmen.

However, two Federal Reserve officials nominated by U.S. President Trump opposed the proposal allowing Powell to serve as central bank chairman indefinitely. This move highlights escalating internal political divisions within the institution as the Federal Reserve continues to face criticism from the White House.

Stephen Miran and Michelle Bowman, both nominated to the Federal Reserve Board by Trump, released a joint statement expressing that although they support Powell serving as interim chairman, the "indefinite" arrangement means they "cannot support this move." Miran cast a dissenting vote on the decision, while Bowman abstained.

Walsh was confirmed by the U.S. Senate last week and is expected to be sworn in as soon as this week. The final vote was 54 in favor, 45 against, with only one bipartisan vote coming from Democratic Senator John Fetterman of Pennsylvania for the Trump-nominated replacement for Powell.

Bowman and Miran raised their objections at a time when the Federal Reserve's independence is facing criticism from the White House. Trump has frequently accused senior Fed officials of refusing to aggressively cut interest rates.

Before Walsh’s confirmation vote, Trump threatened to dismiss Powell if he remained chairman after his second term expired.

In their statement, Bowman and Miran suggested that Powell’s interim role as chairman "should be limited to a clear term of at least one week," though they "could accept a maximum term of one month."

The remaining members of the Federal Reserve Board, totaling seven, all supported the decision for Powell to temporarily remain in office.

Although Federal Reserve board members characterized the current situation as “unprecedented,” there is often a time lag between a new Fed chairman’s congressional confirmation and their formal swearing-in ceremony.

The Federal Reserve stated in an announcement that "appointing the current chairman as interim chairman is in line with past practices during leadership transitions. Powell will serve as interim chairman until Walsh is sworn in as the new chairman."

Since joining the Federal Reserve last September, Miran has consistently supported Trump's call for rate cuts. Once Walsh is sworn in, Miran will leave the Fed. During the Fed’s most recent policy vote, he was the only board member in favor of a rate cut.

The Federal Reserve cut rates three times last year. Entering 2026, despite indications that the U.S. labor market’s downturn has stabilized, the Fed has kept interest rates unchanged, staying within a range of 3.5% to 3.75%.

The surge in energy prices triggered by the Iran war has essentially ruled out the possibility of rate cuts in the coming months. During its mid-June policy meeting, Federal Reserve officials are likely to abandon their stance that "the next step favors a rate cut."

Powell was originally nominated to be Federal Reserve chairman by Trump. Out of concern for the Fed's independence from the White House, he broke the convention that had stood since the 1930s and chose to remain on the Fed’s Board for a period, with his term as a Board member lasting until January 2028.

The Vice Chairman of the Federal Reserve responsible for Bank supervision, Bowman, will continue her Board term until 2034.