What are the chances of Powell becoming a 'shadow chairman'? If Powell does not resign from his position as Federal Reserve Chairman after his term ends (with a term until January 28), there is still a possibility that he will continue to serve as FOMC Chairman. At that time, he will become a true "shadow chairman", although the probability is small. The Fed Chairman we usually refer to is the Fed Board Chair, and the meetings where the Fed discusses monetary policy are called the Federal Open Market Committee (FOMC). The positions of Chairman of the Federal Reserve Board and Chairman of the FOMC are actually two different positions, although historically they have been held by the same person. 1. The difference between these two positions is: The Chairman of the Federal Reserve Board of Governors is nominated by the President and confirmed by the Senate, serving a term of 4 years and is eligible for re-election. Powell's position as Chairman of the Federal Reserve Board of Governors expires on May 15, 2021. The Chairman of the Federal Open Market Committee (FOMC) is elected internally by all FOMC members (12 with voting rights) at the first meeting of each year (usually at the end of January) for a term of one year, and can be re elected. The law and FOMC rules clearly stipulate that the FOMC may elect anyone from its current members to serve as its chairman (not limited to the Chairman of the Federal Reserve Board). 2. The legal basis for the establishment of the Federal Reserve is the Federal Reserve Act 1) The composition of the FOMC is detailed in the Federal Reserve Act, consisting of 7 board members, the President of the New York Fed, and 4 rotating regional Fed chairs, totaling 12 voting members. 2) But there is no mention of the election method, qualification requirements, or who must hold the position of FOMC Chairman (or Vice Chairman). 3) The law only stipulates the method of convening committee meetings (convened by the chairman of the board or requested by three members) and the regulatory framework for open market operations. But the Federal Open Market Committee (FOMC) has its own internal rules, and the FOMC formulates its own organizational rules based on legal authorization, which clearly stipulate: 1) After the first regular meeting in January each year, the committee elects a Chair and a Vice Chair from among its members. Term of one year 2) The candidate for election is any current member of the FOMC (not limited to the Chairman of the Federal Reserve Board of Governors). 3) In history and practice, the FOMC has always elected the Chair of the Board of Governors as the Chair of the FOMC, and the Chairman of the New York Fed as the Vice Chair of the FOMC. But we need to be clear that this is a convention, not a legal requirement. 3. That's the problem here -Powell's term as a member of the Federal Reserve Board will not expire until January 28. As long as he does not voluntarily resign from his position as a board member, he will still be an ex officio member of the FOMC after May 26 (7 board members+New York Fed Chairman+4 rotating regional Fed Chairmen). Therefore, in theory, at the FOMC meeting at the end of January 26 (Powell is still the Chairman of the Federal Reserve Board), the FOMC will naturally vote for him to become the Chairman of the FOMC, which means that even if Powell no longer serves as the Chairman of the Federal Reserve Board after May 26, as long as he is still a member of the Federal Reserve Board, he can still serve as the Chairman of the Federal Open Market Committee FOMC until the end of May 26. (FOMC Chairman's term is one calendar year) Moreover, at the FOMC meeting in January 27, if Powell is still a member of the board, FOMC members may vote to continue electing him as FOMC chairman. It seems that as long as Powell persists in his position as a board member, he will be the chairman of the FOMC for the entire year of 26, which means that even if a new chairman of the Federal Reserve Board takes office after May 26, Powell will still be responsible for convening the remaining 5 FOMCs It should be noted that the FOMC Chairman is the "chief helmsman" and "chief spokesperson" of US monetary policy, responsible for setting discussion agendas, presiding over meetings, and leading collective decision-making. 5. Why is Trump anxious to let Powell resign from the Federal Reserve Board of Governors at the same time after the end of the Board of Governors? This is the key, we don't want a new chairman of the Federal Reserve Board to take office after May 26, and Powell will still serve as the chairman of the Federal Open Market Committee until the end of the year. Because of this, in the 5 interest rate meetings after May 26, there will really be: The situation of coexistence of "nominal chairman" (Federal Reserve Board Chairman) and "shadow chairman" (Federal Open Market Committee Chairman). Thinking about that scene would be very beautiful Unless another special FOMC meeting is held after May 26 to re elect the FOMC Chairman (which also violates FOMC organizational principles) At the January 27th FOMC meeting, when the chairman of the FOMC for 27 years is elected, Powell (if not resigning from the board) has a very small possibility of being elected as the FOMC chairman. A majority of FOMC members (at least 7 votes) are required to openly confront the new Fed board chair and the White House, which poses a great risk of internal division. Legally, this backdoor does exist, but under multiple constraints such as real politics, institutional culture, and Powell's own attitude, this possibility is very, very low, and is almost seen as a theoretical deterrent or bargaining chip, rather than a probable event.