Jerome Powell, the former chair of the Federal Reserve, has warned that a single act of political interference in monetary policy could permanently destroy public trust in the central bank.
As Donald Trump’s administration continues to test the Fed’s longstanding independence, Powell said in a speech on Sunday night that the institution was in the midst of a “stress test”.
Powell, who was accepting the 2026 John F Kennedy Profile in Courage award in Boston, stepped down as Fed chair last month, and was succeeded by Kevin Warsh, but remains on its board of governors.
Legal protections insulating monetary policy from politics “have served the public well” across administrations of both parties, Powell argued in his acceptance speech. “If any administration finds a way to remove Fed officials over policy differences,” he added, “then future administrations will do so as well”.
He spoke as the supreme court weighs a highly anticipated decision on the fate of the Fed governor Lisa Cook, whom Trump attempted to fire last August. Powell did not mention Trump, or Cook, by name.
“The public would lose faith that the central bank will make decisions based only on what’s best for all Americans,” Powell said. “The Fed’s credibility would be lost.”
The JFK Library Foundation’s award committee said it was honoring Powell for withstanding “years of personal attacks and threats from the highest levels of government”, noting that he “refused to let political forces dictate monetary policy”.
Fed decisions were made “based only on our best economic analysis of what would most benefit the people we serve”, Powell said on Sunday. “We do not take into account the fortunes of any political party or politician.”
Powell repeatedly defied the US president’s demands for drastic interest rate cuts. Trump’s subsequent attempt to exert greater control over the Fed set the stage for a constitutional showdown that has unsettled global markets for months.
Last August Trump announced he was removing Cook, citing what he described as “deceitful and potentially criminal conduct” relating to mortgage transactions, marking the first time in the Fed’s history that a sitting president had attempted to remove a Fed governor. Cook denied any wrongdoing and refused to leave.
A federal district judge blocked the firing in September, concluding that Cook’s alleged conduct could not constitute lawful “cause” for dismissal because it occurred before she took office. When the case reached the supreme court in January, both conservative and liberal justices signaled skepticism towards the administration’s position, indicating they were unlikely to grant its request to lift the injunction while litigation continued. A final ruling is expected before the court rises for summer, typically in late June.
Powell attended the January oral arguments and told reporters afterward that the case was “perhaps the most important legal case in the Fed’s 113-year history”.
On Sunday, Powell said Fed officials “hold office with legal protection against removal” and serve “long terms unrelated to the four-year presidential election cycle”.
Quoting the philosopher Edmund Burke, he warned that democratic institutions “take much time, effort, and patience to build but can be torn down all too quickly”.