He will lead the US central bank during a transition period until his successor, Kevin Warsh, officially takes office.

According to Reuters, the decision is intended to ensure continuity in the management of global monetary policy amid deep ideological disagreements and unprecedented legal conflicts within the central bank's governing body.

Powell's second four-year term as Fed chairman officially expired on Friday, ending an eight-year period marked by aggressive monetary policy tightening following the pandemic and consistent protection of the institution's political independence.

While new Fed Chairman Kevin Warsh is expected to be sworn in soon by U.S. President Donald Trump, the White House has not yet announced a formal date, creating a temporary leadership vacuum and necessitating an interim appointment by the Board. The Board's vote to temporarily retain Powell was not unanimous, revealing growing internal disagreements over the central bank's future direction.

Fed Governors Stephen Miran and Michelle Bowman issued a rare joint public statement confirming their dissent because the decision did not provide for a fixed term for Powell's temporary status.

This public dissent underscores the mounting pressure from politically-oriented factions to expedite the transition to Warsh's leadership.

In formally stepping down as Chairman, Powell is pursuing a highly unusual strategy: he is refusing to vacate his separate seat on the Fed Board of Governors, whose term expires in January 2028.

Powell has explicitly stated that he will retain his seat as Governor until he is convinced that the Trump administration has fully terminated the active criminal investigation against him. This standoff introduces significant regulatory and institutional uncertainty into markets: Powell, entrenched on the Board, could become a powerful counterweight to Warsh's growth-oriented policy agenda.