A key Republican senator has signaled he will withhold support for any Federal Reserve chair nominee until the Justice Department completes its investigation into outgoing Chair Jerome Powell. The delay could impact President Trump’s ability to install a new Fed leader by early 2026.
- Senator Bill Hagerty (R-TN) has blocked any Fed chair nominee until the DOJ probe into Jerome Powell concludes
- The DOJ investigation, launched in late 2025, examines Powell’s communications with White House officials during the 2024 election cycle
- Powell’s term ends January 2026; the Senate must confirm a successor before then to avoid leadership vacuum
- Vice Chair Linda Bilmes is currently serving as acting chair under temporary arrangements
- Market expectations for a June 2026 rate cut have declined from 82% to 68% due to governance uncertainty
- Senate Republicans hold a 51-49 majority, making a single senator’s opposition sufficient to delay confirmation
The potential delay in filling the Federal Reserve chair position stems from a pivotal stance taken by Senator Bill Hagerty, a Republican from Tennessee and influential member of the Senate Banking Committee. Hagerty stated he will not back any nominee until the Justice Department’s ongoing investigation into Jerome Powell’s conduct is concluded, a move that could stall confirmation hearings scheduled for February. The DOJ probe, which began in late 2025, focuses on alleged conflicts of interest and unauthorized communications between Powell and White House officials during the 2024 election cycle. While no charges have been filed, the investigation has drawn bipartisan scrutiny and raised concerns about the independence of the central bank. Hagerty emphasized that resolving the probe is a prerequisite for advancing any nomination. The Federal Reserve is currently operating under a temporary leadership structure with Vice Chair Linda Bilmes serving as acting chair. With Powell’s term ending in January 2026, the Senate must confirm a successor before the transition period concludes. Senate Republicans currently hold a 51-49 majority, making a single hold, such as Hagerty’s, sufficient to block a nomination. If the nomination process is delayed beyond March 2026, the Federal Reserve could face operational challenges during a critical phase of monetary policy decision-making, especially amid rising inflation pressures and geopolitical uncertainty. Market participants are closely monitoring the situation, with the CME FedWatch Tool indicating a 68% probability of a rate cut in June 2026—down from 82% just one month ago—reflecting growing uncertainty. The standoff underscores the growing political pressure on the Fed’s leadership and the potential for partisan dynamics to influence one of the most consequential appointments in U.S. economic governance.