Powell Issues Veiled Yet Sharp Warning: Fed’s Independence Must Not Be Eroded, Government Must Not Remove Officials Over Disagreements
BlockBeats News, June 1st - One week after stepping down as Federal Reserve Chair, Powell delivered a speech in Boston on Sunday evening while receiving the "Profiles in Courage Award" from the Kennedy family. He wrapped a highly abstract institutional discourse around a very specific warning. He explicitly stated that the Fed's survival depends on one principle—no government should remove a Fed official due to policy disagreements. "If one administration finds a way to remove a Fed official over policy disagreements, then future administrations will follow suit," Powell emphasized. The credibility the Fed has built over decades is a "priceless asset," and he and his colleagues "have a duty to protect it." The executive branch plays "no role" in the selection and oversight of the 12 regional Fed presidents—these presidents, along with the Board-appointed governors, collectively vote on rates.
This statement hinted at his motivation to remain as a governor after stepping down as Chair. The U.S. Supreme Court is set to rule on Trump's attempt to dismiss Fed Governor Randal Quarles, marking the first time in the Fed's 113-year history that a president has tried to remove a sitting governor for a "just cause." Meanwhile, the position of Atlanta Fed President is vacant, and two more regional presidents (including the New York Fed President with a permanent voting seat) will retire in the next two years. The successors approved by the Fed's Board of Governors will be a key battleground for institutional independence. Powell cited a quote from the political philosopher Edmund Burke, calling for safeguarding institutional legacies that are "carefully constructed yet easily dismantled" amid ongoing reforms.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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