Jerome Powell Steps Down as Fed Chair After Eight Years

Powell raised interest rates four times in his first year. In early 2020, the COVID-19 pandemic triggered lockdowns that halted business activity and pushed the unemployment rate from 4.4% in March to 14.7% in April, according to U.S. Bureau of Labor Statistics data.

At an emergency meeting that March, Powell cut interest rates to near zero. “Families, businesses, schools, organizations, and governments at all levels are taking steps to protect people’s health. These measures, which are essential for containing the outbreak, will nonetheless understandably take a toll on economic activity in the near term,” Powell said at the time.

The COVID-19 recession lasted only two months, the shortest in U.S. history according to the National Bureau of Economic Research.

Inflation rose sharply after the pandemic due to supply shortages and the Russia-Ukraine war. Powell initially described the price increases as transitory before the central bank began raising rates aggressively. Annual inflation reached a 40-year high of 9.1% in June 2022.

The benchmark rate was lifted to its highest level since 2001. By June 2023, annual inflation had fallen to 3%. Economists had widely forecast a recession that did not occur. “Inflation stayed high for too long but once it came down, it came down really fast.

It came down without creating unnecessary pain in the labor market,” Wendy Edelberg of the Brookings Institution told ABC News.

In early 2025, Trump publicly criticized Powell and urged rate cuts. Trump later focused on cost overruns in a renovation of the Fed's headquarters in Washington. Last July, Trump visited the Fed building with Powell for the first such trip by a sitting president in nearly 20 years.

The Department of Justice opened a criminal investigation into Powell in January centered on his congressional testimony about the renovation costs. It was the first such probe of a Fed chair in the institution's 113-year history. Powell issued a video statement describing the investigation as politically motivated.

“No one -- certainly not the chair of the Federal Reserve -- is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure,” Powell said. The Department of Justice moved to drop the probe last month.

Washington U.S. Attorney Jeaninne Pirro said the matter would be handled by the Fed’s inspector general. Powell announced he would remain on the Fed's board of governors until that investigation concludes, potentially until 2028. Kevin Warsh, a former Fed official, has been confirmed by the Senate to serve a four-year term as chair.

He inherits an economy described as resilient by some measures but facing a renewed bout of inflation. “You don't choose your challenges, but you do choose how you respond,” Claudia Sahm, chief economist at New Century Advisors and a former Fed official, told ABC News.