Jerome Powell Warns Against Political Interference in Fed's Independence

• Jerome Powell warned against removing Fed officials over policy disagreements.
• In his speech, Powell described the Federal Reserve as undergoing a “stress test.”
• Powell remains on the Fed Board of Governors until January 2028 after resigning as chair.

Former Federal Reserve Chair Jerome Powell used his first public speech since leaving the top job to deliver a warning about political pressure on the US central bank.

Speaking while accepting the John F. Kennedy Profile in Courage Award in Boston, Powell said the Federal Reserve is facing a “stress test” and argued that its ability to operate independently is critical to maintaining public trust.

The remarks came just weeks after Powell’s term as chair ended on May 15, and Kevin Warsh took over leadership of the central bank.

Powell did not mention President Donald Trump directly, but his comments came amid a series of clashes between the administration and the Federal Reserve.

The Trump administration has pushed for lower interest rates, backed investigations into cost overruns tied to the Fed’s headquarters renovation project, and sought to remove Fed Governor Lisa Cook from the Board of Governors.

Powell warned that allowing governments to dismiss Fed officials over policy disagreements would create a dangerous precedent.

He said that if one administration succeeded in removing central bank officials for their policy decisions, future administrations would likely follow the same path. In that scenario, public confidence in the Fed’s decision-making process would weaken because monetary policy could be seen as driven by politics rather than economic analysis.

According to Powell, the credibility built by the institution over decades remains one of its most valuable assets.

Why Powell Is Staying at the Fed

Unlike most former Fed chairs, Powell has not left the central bank after his leadership term expired. He remains a member of the Federal Reserve’s Board of Governors, where his term runs until January 2028.

His decision prevents the White House from immediately filling another seat on the seven-member board. It also comes as the legal fight surrounding Lisa Cook’s position continues.

Cook sued after the administration attempted to remove her from office over allegations related to mortgage applications before her time at the Fed. Lower courts ruled in her favor and allowed her to remain in her position while the case moved through the legal system. The dispute has now reached the US Supreme Court, which is expected to issue a decision later this year.

Powell has previously indicated that concerns about threats to Fed independence influenced his decision to remain on the board after leaving the chairmanship.

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A central theme of Powell’s speech was the legal separation between politics and monetary policy.

He argued that Congress intentionally designed the Federal Reserve to operate independently from short-term political interests. According to Powell, administrations from both political parties historically respected those protections because they helped maintain confidence in the central bank.

Powell said Fed officials should be judged by the quality of their economic analysis rather than political outcomes.

He acknowledged that policymakers make mistakes and pointed to the Fed’s responsibility to adjust course when errors occur. However, he stressed that decisions should be based on what benefits the broader economy rather than any political party or elected official.

The comments amount to one of Powell’s strongest public defenses of Federal Reserve independence since stepping down as chair.

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