NEW YORK: Former Federal Reserve (Fed) chair Jerome Powell says the US central bank would lose the credibility that’s required to support a strong and stable economy if any president were free to dismiss Fed officials over policy disagreements.
“If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well,” Powell said in the text of remarks prepared for delivery last Sunday in accepting the John F. Kennedy Profile in Courage Award at the JFK Presidential Library in Boston.
In such a scenario, the public would lose faith that the Fed would make decisions based on what’s best for all Americans, Powell said.
“The Fed’s credibility would be lost,” he said. “Our credibility has been built and sustained over many decades, and we have a duty to safeguard that priceless asset for our fellow citizens and for generations to come.”
It was Powell’s first public comments since he was succeeded as head of the central bank by Kevin Warsh.
Powell remains on the Fed’s Board of Governors, a move he said in April was spurred by his concern about attacks on the central bank. His term as a governor doesn’t expire until January 2028.
Powell’s remarks come as the country’s highest court is deliberating the fate of Fed governor Lisa Cook, whom President Donald Trump has sought to fire over unproven mortgage fraud allegations. Cook has denied the charge.
The question of whether she can remain at the central bank, while lower courts hear the case itself, is currently before the Supreme Court.
Powell highlighted the “straightforward” legal protections for the Fed, designed to insulate monetary policy from political interference.
And while acknowledging the deep partisan divide in American politics, he urged Americans to unite in defence of “higher principles that define our nation”.
“Chief among them is respect for the rule of law,” he said.
Powell exited the top job at the Fed earlier this month with a legacy in part defined by his defence of the central bank against relentless pressure from Trump and his allies aimed at securing lower interest rates.
The efforts included personal verbal attacks, the move to fire Cook and a now-sidelined criminal investigation into building cost over-runs.
The dispute took a critical turn in Powell’s favour after he publicly denounced the criminal investigation in January, prompting a wave of support, including from some figures in the Republican Party.
While Powell’s remarks represent another rebuke of the Trump administration, so too does his selection as a co-recipient of the annual award by the JFK Library Foundation.
He was chosen, the foundation said in a statement, for his defence of the Fed’s independence “despite years of personal attacks and threats from the highest levels of government”.
The foundation this year also honoured the people of Minneapolis and St. Paul, Minnesota, “for risking their lives to protect their neighbours and immigrant community members from an unprecedented federal law enforcement operation”.
Past recipients of the Profile in Courage Award include former Presidents Barack Obama, George H.W. Bush and Gerald Ford, and former vice-president Mike Pence. — Bloomberg
