Powell: The Credibility of the "Federal Reserve" Will Wane If the President Can Dismiss Its Officials

SadaNews - Former Federal Reserve Chairman Jerome Powell stated that the U.S. central bank will lose the necessary credibility to support a strong and stable economy if any president is able to dismiss Federal Reserve officials over monetary policy disagreements.

Powell added, according to a prepared speech he was set to deliver on Sunday while receiving the "John F. Kennedy Award for Courage in Public Service" at the John F. Kennedy Presidential Library in Boston: "If any administration can find a way to dismiss Federal Reserve officials due to disagreements over monetary policies, then future administrations will do the same."

Powell stated that the public would, in such a scenario, lose trust that the Federal Reserve is making decisions based on what is best for all Americans.

He added: "The credibility of the Federal Reserve will be lost," noting that "our credibility has been built and maintained over decades, and we have a duty to protect this invaluable asset for our citizens and generations to come."

Attacks on the Federal Reserve

These were Powell's first public statements since he was succeeded by Kevin Warsh as head of the central bank. Powell remains a member of the Federal Reserve's Board of Governors, a position he said in April he retained out of concern for the attacks targeting the central bank. Notably, his term as a board member will end in January 2028.

Powell's statements come at a time when the country's highest court is considering the fate of Federal Reserve Governor Lisa Cook, whom President Donald Trump sought to dismiss over unproven allegations of real estate fraud. Cook has denied these allegations. The Supreme Court is considering whether she can remain at the central bank while lower courts continue to examine the same case.

The Rule of Law

Powell emphasized the "clear and direct" legal protections of the Federal Reserve, designed to insulate monetary policy from political interference. While acknowledging the deep partisan divide in American politics, he called on Americans to unite in defense of the "higher principles that define our nation."

He said: "At the forefront of these principles is respect for the rule of law."

Powell left his position as head of the Federal Reserve earlier this month, after part of his legacy became associated with defending the central bank against ongoing pressures from Trump and his allies aimed at lowering interest rates. These efforts included personal verbal attacks, attempts to dismiss Cook, and a later-abandoned criminal investigation into construction cost overruns.

The dispute shifted significantly in Powell's favor after he publicly denounced the criminal investigation in January, leading to a wave of support that included some figures in the Republican Party.

While Powell's statements represent a renewed rebuke of the Trump administration, his selection as one of the winners of the annual Kennedy Library Foundation award carries a similar significance. The foundation stated in a release that it chose him for defending the independence of the Federal Reserve "despite years of personal attacks and threats from the highest levels of government."

This year, the foundation also honored residents of Minneapolis and St. Paul, Minnesota, "for risking their lives to protect their neighbors and members of immigrant communities from an unprecedented federal law enforcement operation."

Among previous winners of the "Courage in Public Service" award are former U.S. Presidents Barack Obama, George H.W. Bush, and Gerald Ford, along with former Vice President Mike Pence.