Former Federal Reserve Chairman Jerome Powell on Sunday warned against politicizing the central bank, amid concerns President Donald Trump is undermining the institution’s prized independence.
Powell’s speech while accepting the John F. Kennedy Profile in Courage Award in Boston came after he suggested that the Justice Department’s investigation into concerns he lied or misrepresented the taxpayer-funded, multibillion-dollar renovation of the Fed headquarters building in Washington was politically motivated.
This week, Powell reiterated his call for officials to respect the central bank’s independence, saying that “like many other institutions, the Fed has been undergoing a stress test,” during one of his first major public appearances since leaving office.
“Congress wisely chose to insulate monetary policy decisions from political pressure. All other advanced economy nations have done the same,” Powell said during remarks at the John F. Kennedy Presidential Library.
“Democratic institutions take much time, effort, and patience to build but can be torn down all too quickly,” he added. “It is essential that we preserve what is good about these institutions, even as we strive to improve them.”
Powell’s remarks came after he claimed the DOJ’s inquiry, which the agency ended in April, stemmed from Trump’s public anger that Powell declined to lower interest rates.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a rare statement in January, which referenced the investigation. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.”
The president repeatedly floated firing Powell for his refusal to lower rates and urged him to resign from leadership before the former chairman’s term organically expired last month, and he was replaced by Kevin Warsh.
“If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well,” Powell said while accepting the award this week. “The public would lose faith that the central bank will make decisions based only on what’s best for all Americans.”
Powell’s comments also appear to reference Trump’s efforts to fire Federal Reserve governor Lisa Cook, due to findings by Federal Housing Finance Agency Director Bill Pulte that, in 2021, she claimed two different homes as her primary residences to secure more generous loan terms. Trump’s move to fire her has been challenged in court, with arguments that he lacks the legal authority to do so. The Supreme Court is now considering the case.
Powell was chairman of the Fed for eight years. He was first appointed by Trump in 2018 and later reappointed for a second four-year term by former President Joe Biden.
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On Sunday, Powell conceded “mistakes” had been made during his tenure.
“At the Fed, we are, of course, human and thus imperfect,” he said. “When we make mistakes, we acknowledge them and change course.”
