Compiled by: PANews Big Pliers

On April 29 local time, Federal Reserve Chairman Jerome Powell held a press conference following his final FOMC policy meeting. Powell's term as chairman will end on May 15, but he stated that he will not leave the Fed immediately, but will continue to serve on the Fed's board of governors for some time. ( Related reading: Powell's "farewell meeting" reveals the biggest disagreement in 34 years; promises never to be a "shadow chairman" )

1. Who is Powell?

Jerome Powell was born in Washington, D.C. in 1953 and graduated from Princeton University and Georgetown University School of Law. He is not a traditional academic economist, but rather a lawyer, investment banker, and private equity investor. He worked in the Treasury Department during the George H.W. Bush administration and also worked for the Carlyle Group.

In 2012, he was nominated by Obama to the Federal Reserve Board of Governors; in 2017, Trump nominated him to succeed Yellen as Chairman of the Federal Reserve; he officially took office in February 2018. In 2022, Biden nominated him again for a second term as Chairman.

This also makes Powell a very special Federal Reserve chairman: a Republican, nominated by Trump, re-nominated by Biden, and finally serving his term during Trump's second term.

II. Key Milestones During His Tenure

2018: Succeeding Yellen, continuing the rate hike cycle . After Powell took office, the Federal Reserve continued to normalize monetary policy. At that time, the US economy was still expanding, and the Fed was trying to gradually move away from the ultra-low interest rate environment following the financial crisis. However, this also quickly led to conflict with Trump, who repeatedly criticized him publicly for raising interest rates too quickly.

2019: From Rate Hikes to Rate Cuts As trade frictions and global economic slowdown intensified, the Federal Reserve began cutting interest rates. Powell's policy style shifted from "normalization" to "risk management."

2020: The Pandemic Shocks the Federal Reserve, Initiating a Massive Rescue. Following the outbreak of COVID-19, the Federal Reserve rapidly cut interest rates to near zero and launched large-scale asset purchases, credit support, and liquidity tools to stabilize financial markets and the credit system. Brookings summarized that the Fed took extensive action at the time to maintain credit flow and limit the economic impact of the pandemic.

2021: Misjudging Inflation, "Temporary Inflation" Becomes a Stain. Post-pandemic demand rebound, supply chain disruptions, and fiscal stimulus combined to cause rapid inflation in the US. Powell and the Federal Reserve initially called inflation "temporary," which later proved to significantly underestimate its persistence. This was one of the most controversial judgments of his tenure.

2022-2023: Aggressive Rate Hikes to Combat the Worst Inflation in 40 Years. The Federal Reserve entered its fastest rate hike cycle in decades, pushing interest rates ever higher. Powell's role shifted from "market firefighter" to "inflation killer." During this period, market opinions on him were polarized: supporters believed he ultimately protected inflation expectations, while critics argued that the Fed's slow response forced it to resort to even more aggressive rate hikes later on.

2023: Regional Banking Crisis. The collapse of regional banks like Silicon Valley Bank forces the Federal Reserve to combat inflation while preventing the spread of financial system risks. Powell faces a dilemma: continued tightening could damage banks and the economy, while a premature shift could allow inflation to reignite.

2024-2025: Awaiting Rate Cuts, Markets Repeatedly Bet on a "Shift" As inflation falls but remains above the 2% target, the market continues to anticipate a rate cut from the Federal Reserve. Powell, however, repeatedly emphasizes data dependence to avoid prematurely declaring victory.

2025-2026: Conflict Escalates with the Trump Administration, Central Bank Independence Becomes a Core Issue . During Trump's second term, the White House continued to pressure for interest rate cuts. Powell, however, insisted on the Federal Reserve's independence. Although the recent judicial investigation surrounding the renovation costs of the Fed headquarters has been dropped by the Justice Department, Powell stated that the related legal and political pressure was "unprecedented" and that the central bank's independence was at risk.

III. Why did the public have such a complex reaction to his departure?

When Powell left office, public sentiment was not simply one of "farewell" or "criticism," but a complex mix: a sense of relief, a touch of nostalgia, and also considerable dissatisfaction and concern.

Supporters argue that while Powell made mistakes, he ultimately prevented the worst possible outcome. He led the Federal Reserve through the pandemic, market crashes, soaring inflation, banking crises, and political pressure, ultimately preventing a deep recession – a feat many consider a "soft landing." The Washington Post also noted that Powell is credited with combating the worst inflation in 40 years without triggering a deep recession.

Critics argue that his biggest mistake during his tenure was recognizing too late that inflation was not "temporary." If the Fed had tightened earlier, such aggressive rate hikes later might not have been necessary, potentially reducing pressure on businesses, households, and the banking system.

The market also has a feeling that " familiar uncertainty has been replaced by new uncertainty " regarding his departure.

Powell may not please everyone, but he is at least a variable that the market is already familiar with .

Now that Kevin Warsh is in charge, the market will have to reassess the new chairman's policy response: Will he be more responsive to the White House? Will he cut interest rates more quickly? Will he sacrifice inflation targets to maintain growth?

IV. What will Powell do after leaving office?

Strictly speaking, Powell has not completely left the Federal Reserve.

His term as Federal Reserve Chairman will end on May 15, but he said he will remain on the Federal Reserve Board of Governors for an undetermined period. His term as governor could theoretically continue until early 2028.

Reuters reported that he emphasized he would not become a "shadow chairman" or try to interfere with his successor Kevin Warsh, but would try to keep a low profile and support the new chairman.

This is a rare occurrence. It is the first time since 1948 that a Federal Reserve chairman has remained on the board of governors after his term as chairman has ended.

Its practical significance is that Trump cannot immediately fill the vacancy by appointing another governor, and Powell will continue to exist within the Federal Reserve as a symbol of maintaining the central bank's independence .

V. Who will be the next Federal Reserve Chairman?

Kevin Warsh is currently the clearest candidate to succeed Jerome Powell as Federal Reserve Chairman. Multiple media outlets have reported that Warsh has been confirmed by the Senate Banking Committee to succeed Powell. Warsh, a former Federal Reserve governor with a Wall Street background, is considered a candidate closer to Trump's policy preferences.

Market expectations for him mainly focus on two points:

First, he may be more inclined to cut interest rates . Trump has consistently wanted the Federal Reserve to cut rates more quickly to stimulate the economy and lower financing costs. Therefore, the market will be watching whether Warsh will push for a more accommodative monetary policy.

Second, can he maintain the independence of the Federal Reserve ? This is the biggest concern. The final act of the Powell era almost entirely revolves around whether the central bank can withstand political pressure. If Warsh is perceived by the market as overly subservient to the White House, US Treasury bonds, the dollar, and risk assets could all be repriced.

VI. What is the market most worried about?

The market's next concern is not the "personnel change" itself, but three things:

First, inflation is not completely over. Currently, US inflation is still above the Federal Reserve's 2% target. If the new chairman cuts interest rates too early, it could reignite inflation expectations.

Second, the Federal Reserve may be more divided. Significant disagreements emerged at this meeting. AP reports that several dissenters appeared in the latest interest rate decision, indicating a lack of consensus among committee members regarding the path of rate cuts.

Third, the central bank's independence is undermined. If the market perceives the Federal Reserve as shifting from "data dependence" to "political dependence," then long-term US Treasury yields, the dollar's credibility, and global asset pricing will all be affected.

at last

For many ordinary people, the experience during Powell's era was not complicated: prices rose, mortgages became more expensive, and money became harder to earn, but the economy did not seem to have really collapsed.

So when he left office, what people really cared about wasn't what the next chairman would be called, but whether the days ahead would finally be a little easier.

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