The effort by former President Donald Trump to force out Federal Reserve Chair Jerome Powell appears to be having unintended consequences. Faced with intense political pressure and an unusual judicial investigation, Powell has not only refused to step down but may end up staying at the Fed longer.

Trump's prolonged campaign to remove Powell from his position could ultimately result in extending the Fed chair's tenure. Powell indicated last week that if Kevin Warsh, Trump's nominee for the next Fed chair, fails to secure Senate confirmation before Powell's term ends in May, Powell intends to remain as the interim chair of the Federal Reserve.

Powell told reporters, "That is what the law provides," citing historical precedent, such as the delayed confirmation when President Biden renominated him for the chairmanship. Powell also stated for the first time that he will not resign from the Fed's Board of Governors until the Justice Department's investigation into the Fed and himself is fully resolved.

Following last week's Federal Reserve policy meeting, Powell firmly declared, "I have no intention of leaving the Board until the investigation is concluded in an open, transparent, and definitive manner." This statement prompted another round of sharp criticism from Trump, who has repeatedly accused Powell of being too slow to cut interest rates and has often threatened to fire him. After the meeting, where the Fed held rates steady amid rising oil prices and concerns about the job market, Trump called Powell "extremely incompetent" and suggested he "might be dishonest."

"He should have cut rates a long time ago," the former president complained. "Who wouldn't have cut rates?"

The timeline has been disrupted. In January, tensions between the Fed and the government escalated when the Justice Department, led by Washington D.C. Attorney General Jeannie Pirro, launched a criminal investigation into Powell over his congressional testimony regarding cost overruns in the renovation of the Fed's headquarters. This month, a federal judge quashed two subpoenas issued to the Fed, effectively invalidating the criminal investigation and handing Powell a significant victory. However, Pirro has vowed to appeal.

The case has not only prompted Powell to reconsider his departure plans but has also delayed the confirmation process for Kevin Warsh. A key Republican senator who would typically support Warsh has pledged to block a confirmation vote until the investigation into Powell is concluded.

Thus, despite Trump's rhetoric and attempts to push Powell out early, the outcome may be that Powell remains in his role longer. Krishna Guha, Vice Chairman of Evercore ISI, noted, "The irony of this subpoena drama is that it might successfully create a 'shadow Fed chair' named Powell."

Former St. Louis Fed President and current Dean of Purdue University's Business School, James Bullard, suggested that Powell is likely to remain on the Board even after stepping down as chair. Bullard said, "I think he wants to defend the Fed's independence, and that will be a heavy responsibility. The administration could have reached a compromise, but they seem unwilling. So, under the current circumstances, I expect him to stay put."

In a dramatic turn late last week, the Kennedy Library Foundation announced that Powell will receive the "Profile in Courage Award" on May 31 in Boston, honoring his efforts to protect the Fed's independence. The award recognizes public officials who make principled decisions despite potential personal or professional consequences.

The foundation stated, "In the face of relentless political pressure and unprecedented attempts to interfere with the Federal Reserve, Chair Powell has stood firm, committed to defending the institution's independence and the nation's economic stability."