The Fed’s other big debate: When should John Williams’ term end?

Detailed summary

Uncertainty over Fed rules could bring forward the departure of New York Fed president John Williams, giving incoming chair Kevin Warsh an earlier say in choosing his successor.

The looming retirement of the Federal Reserve’s longest-serving policymaker has set off a debate within the US central bank over the rules governing term limits for regional Fed leaders, according to people familiar with the discussions.

Fed officials are parsing whether New York Fed President John Williams can serve until June 2028, when he will reach 10 years of service in his current role, or if internal rules dictate he should step down in June 2027, when he turns 65.

Fed watchers – and Williams himself – have interpreted the rules as allowing the New York Fed chief to serve for another year and a half. A departure next year would give Chairman Kevin Warsh an opportunity to influence the appointment of a new leader to the central bank’s most important outpost a year earlier.

Last month Williams said he expected to serve through June 2028. A spokesperson for the Fed’s Board of Governors in Washington declined to comment on when Fed leaders believe Williams must depart.

Pat Wang, chair of the New York Fed’s board of directors – which is responsible for appointing the bank’s leader – also declined to comment through a spokesperson.

The New York Fed president fills a uniquely powerful regional role that comes with a permanent vote on the rate-setting Federal Open Market Committee.

It’s not clear whether Warsh or any officials on the Fed board would endorse a move to end Williams’ tenure sooner than he expects to depart, according to the people familiar.

Moving to end Williams’ term early could draw objections from other regional Fed leaders worried about encroachment in their operations from Washington.

The New York Fed’s board of directors has not yet announced a formal search for the next president, a process that typically takes many months.

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