Jerome Powell concludes his term as Chair of the Federal Reserve on May 15, 2026, marking the end of one of the most turbulent periods in the history of the U.S. central bank. According to official information from the Federal Reserve, Powell’s term as Chair ends on May 15, 2026, while his term as a member of the Board of Governors runs until January 31, 2028.

Over his eight years leading the Fed, Powell faced a series of major shocks: the COVID-19 pandemic, a sharp deterioration in the labor market, the highest inflation in four decades, an aggressive cycle of interest-rate hikes, and mounting political pressure from the White House.

From a Stable Economy to the COVID-19 Shock

Powell began his term as Fed Chair in 2018, at a time when the U.S. economy was in relatively strong shape. Unemployment was low, growth was stable, and inflation was hovering near the Fed’s 2% target. He was first sworn in as Chair of the Federal Reserve on February 5, 2018, and was later reappointed for a second term in 2022.

However, that period of stability did not last long. In early 2020, the COVID-19 pandemic brought U.S. economic activity to a near standstill. Millions of people lost their jobs, while industries such as restaurants, travel, hospitality, and services were hit particularly hard.

In response to the crisis, the Fed under Powell quickly cut interest rates to near zero in an effort to support the economy. It was a forceful but necessary policy response as the labor market and consumer activity weakened sharply.

A Major Success: Helping the U.S. Economy Recover Quickly After the Pandemic

One of the most notable achievements of Powell’s tenure was the speed of the U.S. economic recovery after the COVID-19 shock. The U.S. unemployment rate surged to 14.7% in April 2020, marking one of the sharpest labor-market deteriorations in modern U.S. history.

However, with the Fed’s loose monetary policy working alongside fiscal support from the government, the U.S. economy recovered much faster than many had expected. The COVID-19 recession lasted only from February to April 2020, making it the shortest recession in U.S. history according to the National Bureau of Economic Research.

This stands out as one of the strongest points in Powell’s legacy: the Fed acted quickly during the crisis and helped prevent a deep, prolonged recession.

A Major Mistake: Underestimating the Inflation Threat

Despite the Fed’s strong response to the pandemic, Powell also faced one of the biggest mistakes of his tenure: underestimating inflation.

After the pandemic, global supply chains were disrupted, consumer demand rebounded strongly, energy prices rose, and the Russia-Ukraine conflict added further pressure to prices. At first, Powell described inflation as “transitory.” In reality, inflation proved to be far more persistent and severe than expected.

In June 2022, U.S. consumer prices rose 9.1% from a year earlier, the highest level in more than 40 years. This forced the Fed to pivot from supporting growth to fighting inflation.

Aggressive Rate Hikes and the Challenge of a “Soft Landing”

To bring inflation under control, the Fed under Powell launched an aggressive interest-rate hiking cycle. Higher rates pushed up the cost of mortgages, consumer loans, credit cards, and business financing. For American households, this meant greater financial pressure. For financial markets, it created a period of heightened volatility and caution.

Still, what made this period remarkable was that the U.S. economy did not fall into the severe recession that many economists had predicted. Inflation dropped significantly from its 2022 peak, while the labor market remained relatively resilient.

This is what makes Powell’s legacy so complex. He was criticized for responding too slowly to inflation at the beginning, but he was also credited with helping bring inflation down without triggering a major wave of unemployment.

Political Pressure and a Test of Fed Independence

The later stage of Powell’s tenure was overshadowed by political tension. After returning to the White House, President Donald Trump repeatedly urged the Fed to cut interest rates. This intensified the debate over the independence of the U.S. central bank.

Tensions escalated further around the Fed’s headquarters renovation project in Washington, D.C., which led to an investigation involving Powell. The matter was later closed by the Department of Justice and referred to the Fed’s inspector general for further review.

Although the case stirred controversy, Powell maintained his stance on protecting the Fed’s independence. This may prove to be one of the most important marks of his leadership, as the Fed’s role is not only to set interest rates but also to maintain public confidence that monetary policy decisions are not driven by short-term political pressure.

Kevin Warsh Takes Over the Fed at a Challenging Time

After Powell, Kevin Warsh was confirmed as the next Chair of the Federal Reserve. The U.S. Senate approved Warsh by a vote of 54-45, and he will serve a four-year term.

However, the transition comes at a difficult moment. Warsh will take over the Fed as the U.S. economy continues to face significant risks: inflation has shown signs of rising again, energy prices remain volatile amid geopolitical tensions, and political pressure on interest-rate policy has not disappeared.

Conclusion

Jerome Powell’s legacy cannot be viewed from only one angle. He led the Fed through the COVID-19 pandemic, helped support a rapid economic recovery, and contributed to avoiding a prolonged recession. At the same time, he underestimated the inflation threat, forcing the Fed into an aggressive rate-hiking cycle later on.

The most important part of Powell’s tenure may not lie in any single interest-rate decision, but in how he defended the Fed’s independent role during a period of intense political pressure.

As Kevin Warsh prepares to take over, the Federal Reserve enters a new chapter with no easy task ahead: controlling inflation, sustaining growth, stabilizing the labor market, and preserving trust in the U.S. central bank. Powell’s legacy will therefore continue to be judged in the years ahead, especially through how the U.S. economy performs after this leadership transition.

Source: ABC News