Jerome Powell warned Sunday that any administration that removes Federal Reserve officials over policy differences would cause the public to lose faith in the central bank, in his first public remarks since his term as Fed chair ended.
"If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well,"Powell said while accepting the John F. Kennedy Profile in Courage Award at the John F. Kennedy Library Foundation in Boston. "The public would lose faith that the central bank will make decisions based only on what's best for all Americans."
Powell, whose eight-year tenure as Fed chair ended on May 15, said the Fed and other institutions including universities, courts, and Congress are "the foundation and the embodiment of our democracy." He described the Fed's credibility as a "priceless asset" built over many decades that officials have a duty to safeguard.
"Like many other institutions, the Fed has been undergoing a stress test," he said. "Congress wisely chose to insulate monetary policy decisions from political pressure. All other advanced economy nations have done the same."
Citing what he views as ongoing threats to the Fed's independence, Powell opted to hold onto his seat on the board of governors after leaving the chairmanship — a choice that blocks President Donald Trump from filling an additional board vacancy for now. His term as governor runs until January 2028. Kevin Warsh was sworn in as Fed chair last month.
Among the pressures Powell catalogued were a White House demand that he resign, a federal criminal probe — later abandoned — into the $2.5 billion overhaul of the central bank's Washington headquarters, and a push to remove Fed Governor Lisa Cook from her post. Cook's legal challenge has been successful so far, with judges ruling in her favor and allowing her to continue serving.
"Democratic institutions take much time, effort, and patience to build but can be torn down all too quickly," Powell said, quoting philosopher Edmund Burke. "It is essential that we preserve what is good about these institutions, even as we strive to improve them."