Zürcher Nachrichten - Powell probe leaves US Fed leadership change in limbo

The Trump administration has ramped up the pressure on Powell, initiating an unprecedented investigation into him over cost overruns related to a Fed building renovation project.

Powell's term as chairman is due to end in May, and Trump has named former central banker Kevin Warsh to replace him. But with the investigation ongoing, the process remains stalled.

- Where are we now? -

In theory, Powell will preside over his final interest-rate-setting meeting as Fed chair on April 28-29.

Powell first took the helm of the Federal Reserve during Trump's first presidency in 2018, and was reappointed to the position under Democrat Joe Biden in 2022.

Since his return to power in January 2025, Trump has relentlessly attacked Powell, questioning his mental abilities and labelling him "too late" for not lowering interest rates at the Republican's preferred pace.

Trump has pressured Powell to resign and even threatened to fire him, although the president backed off the latter when markets reacted poorly to the move.

In 2025, the US president went as far as visiting the Fed's under-renovation headquarters, where he verbally tussled with Powell as the two toured the site.

The renovation project has seen cost estimates increase from an initial $1.9 billion to $2.5 billion.

In January, in an extraordinary move, Powell disclosed that Trump's Justice Department had threatened him with a criminal indictment as it investigated the renovation project.

"The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President," said Powell at the time.

Soon after, following a months-long process, Trump named Warsh, a former Fed governor, as his candidate to replace Powell.

- What's the hold-up? -

Warsh must now be confirmed by the US Senate before he can take up the role.

The Justice Department probe, however, has ruffled many lawmakers' feathers, and Senator Thom Tillis -- a member of Trump's own party who sits on the Senate Banking Committee -- has vowed to hold up the nomination as long as the investigation remains unresolved.

Earlier this month, a federal judge quashed subpoenas issued to the Fed as part of the probe, with the court saying there was "a mountain of evidence" to suggest the investigation was a pressure tactic.

US Attorney Jeanine Pirro -- a Trump ally -- has vowed to appeal that decision.

While Powell's chairmanship ends in May, his term as a member of the Fed's board of governors runs until January 2028.

After the Fed's last rate-setting meeting in March, Powell vowed he would not leave his post as a Fed governor "until the investigation is well and truly over, with transparency and finality."

While it is not unheard of, it is rare for a Fed chair to remain on as a member of the board after their term as chief expires.

And as long as Warsh's nomination process continues, Powell can legally remain in his role as chair.

E.Leuenberger--NZN