MNI: Powell Says Fed Credibility Hinges On Policy Independence

Federal Reserve Governor Jerome Powell on Sunday said the central bank does not take politics into account when considering setting monetary policy and warned that if any administration can fire Fed officials over policy differences then the central bank's credibility would be destroyed. 

“What the public has every right to expect is that we will make our decisions based only on our best economic analysis of what would most benefit the people we serve," the former Fed chair said according to prepared remarks. "We do not take into account the fortunes of any political party or politician in making those decisions."

Powell gave acceptance remarks after being presented the 2026 John F. Kennedy Profile in Courage Award for protecting the independence of the Federal Reserve. Powell is now a Fed governor, after serving as chair from 2018 to 2026. 

"Like many other institutions, the Fed has been undergoing a stress test. Congress wisely chose to insulate monetary policy decisions from political pressure," he said. 

"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. The Fed’s credibility would be lost."

In his remarks, Powell extolled the virtues of public and private institutions as the foundation and the embodiment of American democracy, including universities, research institutions, legislative bodies, the court system, and the Constitution. 

"The Federal Reserve is just one of many such public institutions," he said. (See: MNI INTERVIEW: Fed Winning Fight Over Independence-Richardson) 

"Partisan political differences are normal—indeed essential—in a thriving democracy. But we ought to be united in our commitment to the higher principles that define our nation. Chief among them is respect for the rule of law," he said.

Powell said the Fed at times makes mistakes but warned that institutions can be torn down all too quickly. "It is essential that we preserve what is good about these institutions, even as we strive to improve them," he said.