Powell warns Fed independence at risk if officials can be removed over policy
Former Fed chair Powell, now a governor, warned at a Boston ceremony that any administration able to remove Fed officials over policy differences sets a precedent every future administration will follow.
Summary:
Source: Wall Street Journal, reporting by Nick Timiraos (gated)
- Powell accepted a political courage award from the Kennedy family in Boston on Sunday, his first public remarks since stepping down as Fed chair one week ago
- He warned that if any administration removes Fed officials over policy differences, future administrations will do the same, describing the Fed’s credibility as a priceless asset and a duty to protect
- Powell stressed the executive branch plays no role in selecting or overseeing the 12 regional Fed presidents who help set interest rates
- The Supreme Court is expected to rule within weeks on Trump’s effort to remove Governor Lisa Cook, the first attempted removal of a sitting Fed governor in the institution’s 113-year history
- Two regional Fed presidencies will fall vacant within two years, including the New York Fed, which holds a permanent rate-setting vote
Jerome Powell used his first public appearance since leaving the Fed chair role to deliver a pointed defence of central bank independence, warning that any administration that succeeds in removing Fed officials over policy differences creates a precedent that every future administration will inherit.
Speaking at the Kennedy Presidential Library in Boston on Sunday night, Powell accepted a political courage award from the Kennedy family. He named no president and cited no specific dispute, but was precise on the structural protections that insulate monetary policy from political interference, stressing that the executive branch has no role in selecting or overseeing the 12 regional Fed presidents who, alongside presidentially appointed governors, vote on interest rates.
Powell’s decision to remain on the Fed board as a governor rather than leave public life, as departing chairs traditionally do, now reads as deliberate. The seven-member board approves regional president appointments, and a board less committed to independence could reshape the institution through that process alone. Two regional presidencies fall vacant within two years, including the New York Fed, which holds a permanent rate-setting vote.
The remarks carry immediate weight given that the Supreme Court is expected to rule within weeks on the Trump administration’s effort to remove Governor Lisa Cook, the first such attempt in the Fed’s 113-year history. Powell invoked Edmund Burke’s warning that institutions take sustained effort to build and can be dismantled quickly.
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The remarks land with the Supreme Court weeks away from ruling on Trump’s effort to remove Governor Lisa Cook, the first such attempt in the Fed’s 113-year history. A ruling that permits removal for policy-adjacent reasons would immediately reprice the Fed’s independence premium across rates markets and the dollar. Powell’s pointed reference to the board’s role in approving regional president appointments signals that his continued presence on the board is strategic, not ceremonial, and that a less independent board majority could reshape the institution from within. With two more regional presidents reaching mandatory retirement in the next two years, including the New York Fed head, the succession question is live.
This article was written by Eamonn Sheridan at investinglive.com.