Former US Federal Reserve Chairman Warns Against Politicization Amid Attacks from Trump

Former US Federal Reserve Chair Jerome Powell has emphasized the importance of maintaining monetary policy independence during a speech at an awards ceremony in Boston on Sunday. Powell stated that the Fed is undergoing a “stress test” similar to other institutions, and highlighted the need for insulation from political pressure.

Powell noted that the US Congress had chosen to insulate the central bank from political influence, citing norms upheld by advanced economies. He acknowledged that administrations from both parties have respected these protections, stating that removing Fed officials over policy differences would erode public trust in the central bank’s decision-making process.

The former chair emphasized the significance of the Fed’s credibility in supporting a strong and stable economy for American families and businesses. Powell stressed that the Fed’s independence is essential to maintaining its credibility, which has been built over many decades.

In his broader defense of democratic institutions, Powell highlighted the importance of respect for the rule of law and unity in commitment to higher principles. He referenced John Adams’ quote, stating that the US government operates under “laws and not men.” The former chair also acknowledged the role of public institutions in navigating change and upholding freedom, democracy, and service to the public good.

Powell’s comments come amid ongoing pressure from President Donald Trump on the central bank to cut interest rates more sharply. However, Powell did not directly address Trump’s criticisms during his speech.

Source: Al Jazeera