Jerome Powell Steps Down as Fed Chair After Eight Years

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.