Chair Powell made three points on succession. He will stay on as chair until his successor is confirmed. He won’t leave the board until the DoJ investigation goes away. He won’t commit to leaving even after that.
The third point is somewhat controversial. Especially when there is little evidence that attacks on the Fed have damaged the perceived independence of the Federal Reserve.
The Warsh nomination was well received. Market based inflation expectations are well anchored. Foreign ownership of US assets stable. Powell staying on beyond his term as chair wasn’t a factor in any of that.
In a sensible effort to provide continuity it risks crossing over into inviting controversy. Not committing to leaving conveys that Powell appears to have less faith in Fed independence in his absence than markets do. That’s either misguided or highly concerning because that view certainly isn’t well priced.
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