Jerome Powell has moved his office a few doors down. His term as Fed chair ended, but he is refusing to leave the board - a maneuver last seen in 1947.
He’s staying to keep the board at full capacity and block President Trump from appointing a political loyalist. The move follows a spurious Justice Department probe into Fed renovations, which Senator Tom Tillis used as leverage to stall Trump’s nominees until it was dropped. Powell’s continued presence turns a technical banking role into a lifetime political standoff.
“Powell is protecting the institution, but the move essentially turns a technical banking role into a lifetime appointment drama.”
- Colby Smith, The Daily
Into this charged environment steps Kevin Warsh, newly confirmed by the Senate and poised to take the chair. Warsh built his reputation as an inflation hawk who criticized the Fed’s ballooning balance sheet and interventionist policies. Yet, to secure the nomination, he softened his stance on interest rates, aligning with Trump’s demand for cuts.
His first major test comes in June. The Producer Price Index just hit 1.7%, nearly triple expectations, signaling persistent inflation pressure. Holding rates steady maintains credibility but invites presidential wrath; cutting them looks like political capitulation. On Bitcoin & Economic News, David Bennett notes that Bitcoin’s price, which fell on the PPI news, is now more correlated with traditional macro data as finance professionals dominate its trading.
“Warsh must choose between supporting the Bitcoin ecosystem he understands and aggressive rate hikes to stifle runaway producer costs.”
- David Bennett, Bitcoin And | Bitcoin & Economic News
The standoff has reshaped Fed succession, mirroring the politicized calculus of Supreme Court retirements. Powell’s hold on his governor’s seat ensures Warsh operates with a board he didn’t choose, limiting his autonomy from day one. The central bank’s independence, already strained, now hinges on a former chairman camping in the building.
