Market attention has turned to the Federal Reserve after U.S. President Trump announced over the weekend that he has identified a successor for Fed Chair Jerome Powell, with plans to reveal the nominee early next year.

Deutsche Bank noted on Tuesday that Powell could remain as a Fed governor after his term as chair ends. Analyst Jim Reid highlighted that while convention suggests Fed chairs depart entirely after their leadership term, there is no legal requirement forcing them to do so.

"Here's the intriguing part: Powell's chair term expires in May 2026, but his board membership runs through January 2028. Legally, he's entitled to stay," Reid explained. "Only two of 15 former Fed chairs remained beyond a few days after leaving leadership—their precedents offer crucial context for Powell's decision."

The first was Charles Hamlin, the inaugural Fed chair who served as governor for two decades after his 1916 term ended. "As a career civil servant, Hamlin prioritized institutional loyalty over titles," Reid noted.

The more relevant precedent involves Marriner Eccles, who led the Fed through the Great Depression and WWII. "After being pushed out as chair by President Truman in 1948, Eccles retained his governorship—partly due to market respect for him, and partly because Truman lacked authority to remove him. He stayed to defend central bank independence," Reid added.

Reid suggested Powell might adopt Eccles' strategy if political pressures threaten Fed independence in 2026. By keeping his board seat, Powell would maintain FOMC voting rights—an unprecedented move in modern times. "Much depends on the administration's next Fed chair nominee," Reid concluded.

Wall Street remains vigilant about central bank independence. Despite mid-November volatility, the S&P 500 maintains double-digit yearly gains after a significant rebound.