LARRY KUDLOW: Time to say goodbye, Jay Powell

• Under Powell's leadership, the Consumer Price Index rose cumulatively 32% with an average annual rate of 3.5% - the worst inflation record in over 40 years
• Treasury Secretary Scott Bessent criticized Powell's decision to stay on the board as 'an insult' to other Republican nominees, suggesting Powell alone cannot maintain Fed integrity
• Kevin Warsh is expected to eliminate the Fed's focus on climate and DEI policies, refocus on monetary policy and dollar stability, and end the practice of 'forward guidance' by multiple Fed officials

Summary: Powell to Remain on Fed Board; Kudlow Criticizes Decision

Key Developments:

Federal Reserve Chairman Jerome Powell announced he will remain on the Fed Board of Governors after his chairmanship ends May 15th, despite his term expiring. Powell stated he won't leave until a cost overrun investigation concludes, planning to "keep a low profile as a governor."

Leadership Transition:

Kevin Warsh was approved by committee (13-11 vote) as Powell's successor and awaits full Senate confirmation, expected next week. This marks only the second time in the Fed's 113-year history that a former chairman has stayed on as a board member.

Powell's Performance Record:

• Consumer Price Index averaged 3.5% annually under Powell's tenure—highest since Paul Volcker and worst in 40+ years
• Cumulative CPI increase of 32%
• Real GDP averaged 2.4% annually—described as unimpressive
• Criticized for embracing climate agenda and DEI initiatives

Market Implications:

Treasury Secretary Scott Bessent expressed "strong displeasure" with Powell's decision, calling it "an insult" to other Republican Fed nominees. Bessent suggested Powell's continued presence undermines confidence in incoming leadership.

Expected Policy Changes Under Warsh:

• Rejection of economic models linking strong growth to higher inflation
• Focus on supply-side economics: low taxes and deregulation as disinflationary forces
• Refocusing Fed on monetary policy rather than fiscal matters
• Ending "forward guidance" and reducing Fed official communications
• Maintaining Fed independence through political neutrality
• Emphasis on money supply control and dollar stability

Concern: The arrangement creates potential governance issues with "two chief executives" at the central bank.