Powell Warns Political Pressure Threatens Fed's Independence

(MENAFN) Former Federal Reserve Chair Jerome Powell has cautioned that escalating political interference risks eroding public trust in the central bank's ability to operate free from partisan influence.

Powell, whose chairmanship concluded on May 15 — he now serves as a Fed governor — described the Fed as enduring a political "stress test" orchestrated by the Trump administration, a challenge he said was also confronting other pillars of American governance, including the judiciary and academic institutions.

Addressing the John F. Kennedy Library Foundation in Boston on Sunday, where he was presented with the Profile in Courage Award, Powell warned that any administration successfully ousting Fed officials over policy disputes would set a dangerous precedent for those that follow.

"If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well," Powell said. "The public would lose faith that the central bank will make decisions based only on what's best for all Americans."

Powell outlined a series of pressures his tenure endured: the White House calling for his resignation, a Justice Department criminal investigation into a $2.5 billion renovation of the Fed's Washington headquarters, and a campaign to unseat Fed Governor Lisa Cook.

Federal prosecutors launched the probe in January, though it was dropped by April. Powell previously attributed the investigation to President Donald Trump's frustration with the Fed's reluctance to accelerate interest rate cuts.

Drawing a broader warning about the fragility of democratic systems, Powell stressed that institutions take generations to construct yet can collapse rapidly under sustained assault.

"It is essential that we preserve what is good about these institutions, even as we strive to improve them," he said.

Kevin Warsh was sworn in as Powell's successor on May 22.

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