Former Federal Reserve Chair Jerome Powell warned against politicizing monetary policy during a speech at an awards ceremony in Boston on Sunday. He said central bank is facing a “stress test” like other institutions under pressure from the Trump administration .
Powell, who just stepped down from his role, pointed out that the Fed’s independence is crucial. He believes both parties have respected this principle over the years. “These protections have served the public well,” he said,noting that Congress has made smart choices to keep the Fed free from political meddling.
He cautioned that if any administration were to oust Fed officials over policy differences, it could create a troubling precedent. “The public would lose faith that the central bank will make decisions based only on what’s best for all Americans,” Powell remarked. Such move would damage the Fed’s credibility,vital for a solid economy.
Powell's comments follow President Donald Trump’s ongoing criticism of the central bank,especially regarding its hesitance to make deeper interest rate cuts . Trump has often voiced his dissatisfaction with Powell’s leadership,even hinting at firing him during his presidency. While Powell didn’t name Trump directly,his remarks reflect the political pressure the Fed is under.
In his acceptance speech for the 2026 John F. Kennedy Profile in Courage Award, Powell defended democratic institutions. He stressed that partisan differences are essential for a healthy democracy. “But we ought to be united in our commitment to the higher principles that define our nation,” he said,emphasizing the rule of law.
Powell's worries about politicization mirror challenges faced by other institutions today. He argued that the Fed’s credibility,built over decades,must be protected for future generations. “Our credibility enables the Fed to support a strong and stable economy for benefit of American families and businesses,” he stated.
During his time in office,Powell faced intense scrutiny from Trump and his allies . Notably, Trump appointee Jeanine Pirro launched a brief criminal investigation into Powell's congressional testimony about renovations at the Fed's headquarters. Trump also tried to remove Fed governor Lisa Cook based on unproven allegations of mortgage fraud,though the Supreme Court ruled she could stay in her position while a legal challenge is underway.
Under the Federal Reserve Act,the president must show “cause” to remove any Fed governor, a standard seen as meaning malfeasance. This legal framework aims to protect central bank's independence and ensure monetary policy decisions are free from political influence.
The John F . Kennedy Profile in Courage Award,created in 1989, honors individuals who show courage in public service,often risking their careers . Previous winners include former President Barack Obama and former UN Secretary-General Kofi Annan.
