Powell warns political pressure threatens Fed independence in JFK speech
Ex-Fed chair says removing officials over policy differences would undermine decades of credibility...
Former Federal Reserve Chair Jerome Powell delivered one of his most forceful defenses of the central bank's independence on Sunday while accepting the John F. Kennedy Library's Profile in Courage award. In his first major public appearance since leaving the Fed's top job in May, Powell warned that political pressure — specifically the removal of bank officials over policy disagreements — would destroy the credibility the Fed has spent decades building. He called independent institutions like universities, courts, Congress, and the central bank 'the foundation and the embodiment of our democracy' and argued the Fed's independence is a 'priceless asset'. The speech comes as the Trump administration continues efforts to reshape the central bank.
Powell, who frequently clashed with Trump during his eight-year tenure, took an unusual step after stepping down as chair: he kept his seat on the Fed's governing board, which he can hold until January 2028. This move deprives the administration of an opportunity to appoint another like-minded member. At the same time, the Trump administration has sought to fire Fed Governor Lisa Cook, sparking a lawsuit. Cook has so far been allowed to keep her seat by the courts. Powell's defense of institutional independence resonates beyond the Fed, as similar pressures mount on other democratic institutions.
- Powell called the Fed's independence a 'priceless asset' and warned removal of officials over policy differences would undo decades of credibility.
- He stepped down as chair in May but kept his board seat until 2028, blocking a Trump administration appointment.
- The administration is trying to fire Fed Governor Lisa Cook, but she sued and courts have allowed her to keep her seat.
Why It Matters
Powell's warning highlights escalating political pressure on the Fed, potentially threatening its credibility in setting monetary policy.