Powell Says Fed Credibility Would Collapse if Presidents Could Fire Officials Over Policy Disputes

Former Federal Reserve Chair Jerome Powell publicly warned against any erosion of central bank independence.

Bloomberg reported on June 1 that Powell made the remarks during a speech at the Profile in Courage Award ceremony at the John F. Kennedy Presidential Library in Boston. “If a president is allowed to remove Federal Reserve officials over policy disagreements, the central bank’s credibility would collapse,” he said.

He said that if one administration created a precedent of dismissing Fed officials over policy differences, future administrations would do the same. The public would then come to see the Fed as making decisions for political purposes rather than in the interests of the country as a whole.

Powell called the Fed’s credibility an asset built over decades and said the institution had a duty to protect it for future generations.

The comments came as President Donald Trump seeks to remove Federal Reserve Governor Lisa Cook. Trump has alleged that Cook was involved in mortgage-related fraud, while Cook has denied the accusation.

Cook’s status on the board is now before the U.S. Supreme Court.

Powell also said the Fed’s legal independence was designed to shield monetary policy from political pressure. “Respect for the rule of law is a defining principle of the United States,” he said.

Bloomberg said the remarks were interpreted as another public criticism of the Trump administration. Powell and Trump repeatedly clashed during Powell’s tenure as Trump pushed for interest-rate cuts.

Powell was also named a co-recipient of this year’s Profile in Courage Award by the JFK Foundation in recognition of his defense of Fed independence.