President Trump’s plans for a more receptive Fed may have backfired so spectacularly that Jerome Powell may end up staying as chairman beyond the end of his term, while Stephen Miran, Trump’s most loyal supporter on the bank’s rate-setting committee, leaves the institution.
Trump has repeatedly taken aim at the chair of the U.S. Federal Reserve—often via personal insults—since launching his presidential bid. First, he wanted Powell to hold interest rates higher to avoid boosting President Biden’s ratings on the economy. After he won the Oval Office, he began lobbying for lower rates and has gone to unusual lengths to shape monetary policy, including multiple legal threats.
Last week, he achieved a key aim: finding a replacement for Powell (whose term as Fed chair ends in May) who is suitably dovish, but isn’t seen as so close to the White House that it would spook markets.
Kevin Warsh, a former Fed governor under Ben Bernanke, didn’t upset markets beyond potentially adding to the decline in precious metal prices with his hawkish tone on the central bank’s balance sheet. But Warsh may not shape the tone of conversations on the base-rate-setting Federal Open Market Committee (FOMC) as quickly as Trump might have hoped.
That’s because Warsh has to get through Senate Banking Committee hearings before being approved, and Democrats on the panel are refusing to proceed until criminal proceedings brought by the Trump administration against Fed members have been dropped.
“We demand that you delay any nomination proceedings for Mr. Warsh until after the pretextual criminal investigations involving Chair Powell and Governor [Lisa] Cook have been closed,” banking committee Democrats said in a statement.
Currently, two members of the FOMC are facing court action: Powell himself and Fed Governor Cook. So far, the U.S. Supreme Court has barred President Trump’s September attempt to remove Cook from her post on the basis of claims that she had fraudulently secured favorable mortgage terms before she joined the Fed. Cook denies the allegations.
Earlier this month, Powell also confirmed he was under criminal investigation by the Department of Justice over testimony he gave to a Senate committee about renovations to Federal Reserve buildings. The renovation costs have been a point of debate between Trump and Powell, and the duo argued in July (in front of the world media) over whether the budget had been exceeded.
The Democrats added: “The [Warsh] nomination comes after months of repeated efforts by President Trump and his administration to influence the Fed by intimidation, including by opening criminal investigations into Fed Governor Cook and Fed Chair Powell. These ongoing efforts by the president to control the Fed—which must be able to exercise independent judgment—undermine public confidence in any nomination for chair at this time.”
Given that Trump has shown no signs of dropping the investigation, observed UBS chief economist Paul Donovan, the Democrat roadblock may mean Powell stays on as Fed chair even longer.
Writing to clients this morning, Donovan observed that the Democrats’ action “was expected, but raises the prospect of Chair Powell staying on as FOMC chair (not Board of Governors chair) beyond May.”
Miran resignation
Meanwhile, Trump’s main ally at the Fed was Stephen Miran, who until today had served jointly on the Fed and as chairman of the Council of Economic Advisers (CEA) to the executive branch.
Miran had first been nominated to the Federal Reserve Board as a governor to temporarily replace Adriana Kugler, whose term was due to finish at the end of January. Miran later said that if his Fed duties carried on beyond that date, he would resign from the CEA—which he has subsequently done.
While it’s not clear if Miran will now receive a formal nomination to continue his position at the Fed, it marks (at least publicly) a reduction in the proximity between the White House and the Fed, which is legally mandated to be politically independent.
White House spokesman Kush Desai told media that Miran’s resignation was making good on the pledge he made last year, adding: “Prior to the start of … Stephen’s leave last September, his brilliant insights and powerful advocacy on behalf of the president made him an enormous asset for the White House, and he established himself as a key member of the Trump administration’s economic team.”
Join us at the Fortune Workplace Innovation Summit May 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.
