Ex-Federal Reserve chair Jerome Powell sounds alarm over political interference

Former Federal Reserve Chair Jerome Powell warned that political interference in monetary policy could permanently damage public trust in the central bank. Speaking at an award ceremony, Powell described the Fed as undergoing a "stress test" under the Trump administration, which has challenged the institution's independence. He emphasized that removing Fed officials over policy disagreements would set a dangerous precedent. This comes as the Supreme Court considers a case involving President Trump's attempt to fire Fed Governor Lisa Cook, an action Powell stated could undermine the Fed's credibility and its ability to make decisions solely based on economic analysis for the public good.

Former US Federal Reserve Chair Jerome Powell warned against the politicization of monetary policy, stating the central bank is undergoing a "stress test" like other institutions in the current era. Speaking in Boston on Sunday after receiving the John F Kennedy Profile in Courage Award, Powell emphasized that Congress wisely insulated the Fed from political pressure, a norm upheld by administrations of both parties. He cautioned that allowing administrations to remove Fed officials over policy differences would erode public faith in the central bank's independence, leading to a loss of credibility essential for supporting a strong and stable economy. Powell stressed the importance of safeguarding the Fed's decades-old credibility for the benefit of American families and businesses.