Nick Timiraos

I don't think this is about what he will do.

It's about what his presence prevents.

One of the concerns that we've written a little bit about over the past few months is a clear erosion of what we call Fed independence, their ability to set interest rates without political dictates.

So by staying, Powell is taking that seat off the table and really becoming a firewall.

And so for Powell, this is about protecting the institution or at least making sure that when he does go, it doesn't lead to even a bigger fracture.

It certainly could be read that way.

People will say, look at what he's doing now.

He just won't leave.

He won't let Kevin Warsh, the new Senate-confirmed Fed chair, come in and run the Fed the way he thinks it should be run.

I'll put it this way.

In the last 20 years, when you wanted to know where the Fed was heading, you really only had to listen to one voice, which was the chair.

If that's not the Fed that we're going to have, if you have a committee that's openly split, regional bank presidents who are publicly pushing back, that means that instead of one signal, you're going to have a chorus potentially of competing signals and volatility around competition.

What people expect the Fed to do can bake in a risk premium into long-term interest rates, meaning that uncertainty about the path of policy itself becomes a cost.

Rate cuts are off the table for now.

Inflation is moving in the wrong direction, and that puts the Fed in a tough spot.

And we've all seen how the president responds to a Fed chair who says no.

That's a great question.

When his professional obituary is eventually written,

The people I talked to are saying he will be remembered as the chair who challenged a president's attempt to control monetary policy, and he repelled it.

So if Fed independence survives, holds, his legacy could look quite favorable.