Former US Federal Reserve Chair Jerome Powell has issued a forceful defence of central bank independence, warning that allowing political interference in monetary policy would permanently damage public trust in the institution. Speaking on Sunday at the John F. Kennedy Presidential Library and Museum in Boston, Powell accepted the 2026 JFK Profile in Courage Award — presented to him specifically "for protecting the independence of the Federal Reserve" — and used the occasion to deliver his most direct public remarks yet on the pressures the Fed has faced.
"Like many other institutions, the Fed has been undergoing a stress test," Powell said, in an unmistakable reference to the sustained pressure campaign waged against him by President Donald Trump. Without naming Trump directly, Powell warned of the long-term consequences of politicising the central bank: "If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well. The public would lose faith that the central bank will make decisions based only on what's best for all Americans." He emphasised that Congress had "wisely" chosen to insulate the Fed from political interference, and that all other advanced economies uphold similar norms — ones that administrations of both parties had historically respected.
The backdrop to Powell's remarks is a period of unusual turbulence for the Fed. Trump repeatedly threatened Powell with dismissal during his tenure, frustrated at the pace of interest rate cuts. A short-lived criminal investigation into Powell's congressional testimony — related to renovation works at the Fed's Washington headquarters — was eventually dropped, reportedly to ease the Senate confirmation of Powell's successor. Trump also sought to remove Fed Governor Lisa Cook over unproven mortgage fraud allegations; the Supreme Court has ruled she may remain in her post while it considers the legal challenge. Under the Federal Reserve Act, a president must demonstrate "cause" — widely understood to mean malfeasance — to remove a Fed governor.
Powell stepped down as chair earlier this month after completing his term and has been succeeded by Trump nominee Kevin Warsh following a contentious Senate confirmation process. In an unusual move for departing Fed chiefs, Powell chose to remain on the board as a governor until 2028, citing concerns about institutional independence, while promising to keep a "low profile." Treasury Secretary Scott Bessent, welcoming the transition, declared on Friday that "there is a new sheriff in town."
Why this matters: the Federal Reserve, the United States' central bank, sets interest rates and shapes monetary policy for the world's largest economy — decisions that ripple across global markets and affect borrowing costs, inflation, and employment worldwide. Powell's warnings reflect a broader concern among economists and legal scholars that eroding the institutional norm of central bank independence, built over decades, could compromise a government's ability to manage inflation credibly. "Our credibility has been built and sustained over many decades," Powell said. "We have a duty to safeguard that priceless asset for our fellow citizens and for generations to come."