Trump's assaults on the Federal Reserve's independence must cease

At a July 8 cabinet meeting, President Donald Trump launched a fresh barrage of attacks on Federal Reserve Chairman Jerome Powell over his handling of interest rates, claiming Trump’s team could “do a better job than him,” accusing Powell of lying to Congress and calling for his resignation.

The president even suggested that Powell acted to benefit the Biden-Harris campaign by speeding up rate cuts under Trump’s predecessor, and slow-walking them now. “He’s always late with me, not with Biden,” Trump said, implying that Powell’s monetary policy decision-making was politically motivated.

The truth is as follows: Mr. Powell has a documented history of nonpartisan behavior when it comes to monetary policy, most recently displayed on June 24th during testimony before the House Financial Services Committee. Maintaining a nonpartisan stance, the Fed chair refused to make any comments about either Trump or the administration’s fiscal policy.

Of course, this is not the first time President Trump has attempted to strong-arm Powell into aligning with his political agenda. Earlier this month, Trump demanded Powell’s resignation — echoing allegations by Federal Housing Finance Agency Director Bill Pulte that Powell lied to Congress about the Federal Reserve’s headquarters renovation. This baseless allegation should alarm every American who values a stable, predictable monetary system.

This is not a disagreement over renovations. It’s about the independence of the Federal Reserve, an institution deliberately insulated from day-to-day political pressure so it can make decisions in the best interest of the nation’s long-term economic health. But the most recent accusations — unfounded and dangerous — pose a more immediate threat to one of the cornerstones of America’s economic governance: the independence of the Federal Reserve.

History teaches that when central banks fall under political control, the consequences are severe. Hyperinflation, currency devaluation and economic crises are common outcomes in countries where politicians dictate monetary policy. A central bank must sometimes make unpopular decisions — such as raising interest rates to combat inflation — that elected officials might oppose in the short run but are necessary to safeguard the economy’s long-term stability.

Allowing political leaders to remove the Fed chair over policy disagreements or exaggerated allegations undermines confidence in the economy. Investors, businesses and consumers all rely on a predictable and credible monetary authority. Without that, financial markets become volatile, borrowing costs rise unpredictably and economic growth falters.

Powell’s record deserves recognition, not condemnation. Under his leadership, the Federal Reserve has taken unprecedented steps to understand and address economic disparities. The Fed’s emphasis on maximum employment has extended the benefits of economic growth to communities traditionally left behind, including low-income households and minority workers. Powell has repeatedly underscored the importance of inclusive economic growth, launching initiatives such as the Fed’s 2020 series of events on “Racism and the Economy” and directing research into racial wealth gaps.

Moreover, under Powell’s tenure, the Fed helped stabilize the economy during the COVID-19 pandemic through swift, decisive actions that protected millions of jobs and businesses — particularly in vulnerable communities. His leadership demonstrated a clear commitment to ensuring that monetary policy supports broad-based economic opportunity.

The allegations surrounding building renovations, even if sincerely held by Powell’s critics, do not rise to the level of misconduct warranting removal. Congressional oversight of the Fed is appropriate and necessary, but using oversight as a political cudgel threatens the institutional integrity that makes the U.S. financial system the envy of the world.

Calls for Powell’s resignation over spurious charges signal an effort to intimidate the Fed into political compliance. That is a line we must not cross. The Fed must remain free to pursue price stability and maximum employment based on rigorous analysis — not partisan agendas.

At this critical juncture for the U.S. economy, with inflation pressures moderating and employment gains continuing, undermining confidence in the Federal Reserve would be profoundly destabilizing. We should reject attempts to politicize the Fed and reaffirm our commitment to an independent central bank — one that can act in the nation’s best interest, even when doing so is politically inconvenient.

For the sake of economic stability, prosperity, and fairness, Jerome Powell should remain at the helm of the Federal Reserve.