In his first public remarks since leaving the Fed chair, Jerome Powell warned that politicizing the central bank would destroy public trust.
In his first public remarks since leaving the Fed chair, Jerome Powell warned that politicizing the central bank would destroy public trust.
In his first public remarks since leaving the Fed chair, Jerome Powell warned that politicizing the central bank would destroy public trust.
Former Federal Reserve Chair Jerome Powell warned Sunday that no central bank can survive if administrations remove officials over policy disagreements, accepting the JFK Profile in Courage Award after three direct attacks on the Fed's independence.
"If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well," Powell said at the ceremony in Boston. "The public would lose faith that the central bank will make decisions based only on what's best for all Americans."
Powell's term as chair ended May 15 after eight years. His successor, Kevin Warsh, was sworn in May 22. Powell chose to remain as a Fed governor — an unconventional move that prevents President Donald Trump from appointing another board member. The decision followed Trump's efforts to fire Fed Governor Lisa Cook, calls for Powell's resignation, and a criminal probe of Powell initiated by the administration.
The warning carries weight because Powell's continued presence on the board gives him a vote on future monetary policy decisions. With the Fed navigating an inflation gauge at 3.8 percent — well above the 2 percent target — and a new chair taking over, the internal dynamics of the Federal Open Market Committee face unusual uncertainty.
Three Fronts of Pressure
The attacks on the Fed's independence unfolded on multiple fronts. Trump sought to remove Cook, a Biden appointee, in a move that legal experts said could test statutory protections for Fed board members. The president also called publicly for Powell's resignation, and the administration pursued a criminal investigation of Powell — an escalation without modern precedent at the central bank.
Powell did not name Trump directly in his remarks, instead speaking in generalities about democratic institutions. "Democratic institutions take much time, effort, and patience to build but can be torn down all too quickly," he said. He included the Fed alongside the courts and universities as core institutions key to the country's success and standing in the world.
The John F. Kennedy Library Foundation, which announced the award earlier this year, said Powell had "safeguarded one of the country's most essential apolitical institutions and demonstrated extraordinary courage in the face of sustained personal and professional risk." The award was also given to citizens of Minneapolis and St. Paul for their response to immigration enforcement in the Twin Cities area.
Warsh, the new Fed chair, was confirmed by the Senate in a 54-45 vote. His approach to inflation may differ from Powell's: in recent public comments, Warsh has urged the central bank to consider alternative measures of underlying inflation beyond its standard gauge. The transition comes at a delicate moment, with the personal consumption expenditures price index running at 3.8 percent, more than double the Fed's target.
The Fed's structure is designed to insulate monetary policy from political pressure. Board members serve staggered 14-year terms and can only be removed for cause — a standard that legal scholars say does not include policy disagreements. Powell's warning echoed concerns raised by former Fed chairs Paul Volcker and Alan Greenspan, who each defended the central bank's independence during their tenures.
Powell's decision to stay on the board after his chairmanship creates an unusual dynamic: a former chair with a vote on the rate-setting committee, alongside a new chair implementing his own policy vision. Markets will watch the first few FOMC meetings under Warsh for signs of cohesion or divergence, with the next rate decision scheduled for June.
This article is for informational purposes only and does not constitute investment advice.
