Powell's Warning: "If the Fed Loses Trust, the Economy Will Be Shaken"

【Financial News, New York = Lee Byung-chul, Correspondent】Jerome Powell, the former chair of the Federal Reserve (Fed), who stepped down after a clash with U.S. President Donald Trump, has effectively launched a direct criticism of the Trump administration. Powell warned that if central bank independence is undermined, trust in and stability of the U.S. economy could collapse, and he described political interference in the central bank as a "violation of the rule of law."
In an acceptance speech for the John F. Kennedy Profile in Courage Award in Boston on the 31st (local time), Powell said, "The Fed is undergoing a stress test, like many U.S. institutions," adding, "If central bank officials can be dismissed over policy differences, future administrations will repeat the same thing."
Powell stressed, "The public will lose faith that the central bank is making decisions that are best for all Americans," and added, "If the Fed's credibility disappears, its ability to support a strong and stable economy will also weaken."
He did not mention Trump by name in the speech, but the remarks were widely interpreted as aimed at the Trump administration. During his presidency, Trump repeatedly pressured Powell to cut interest rates, calling him "stupid" and "foolish."
Powell said in the speech, "Partisan political differences are normal and essential in a democracy," but added, "We must unite around the higher principles that define the nation, and the most important of them is respect for the rule of law."
He also said, "Other countries see the United States as a nation built on trust, and that trust must be preserved," and noted that former President John Fitzgerald Kennedy (JFK) "stood against the spread of authoritarianism, which is the opposite of American values." Markets interpreted the remarks as a veiled criticism of Trump's political interference.
Powell remained on the Fed's board of governors even after his term as chair ended in May. It was the first such case in about 80 years.
By contrast, Trump recently said at a White House ceremony for his successor Kevin Warsh's inauguration as Fed chair, "I hope you will be a completely independent chair," adding, "Don't look at me, don't look at anyone, and judge for yourself."




[email protected] Lee Byung-chul, Correspondent Reporter