Federal Reserve Chair Jerome Powell’s decision to stay on the central bank’s board as a governor once his term as chair expires on May 15 is a great example of how President Donald Trump’s authoritarian pressure tactics can backfire.
Although Powell’s term as chair is ending, his tenure as one of the seven governors on the board doesn’t expire until 2028. Typically, Fed chairs step down from the board altogether after their term as chair ends — the The Wall Street Journal notes that “every chair for the past 75 years has left the central bank at the end of his or her leadership term.” Powell said that he had expected to follow that tradition, but that he’s breaking the norm because of the Justice Department’s bogus criminal investigation of him, meant to press him to lower interest rates.
Powell is showing that the Federal Reserve can withstand immense political pressure.
“I’m literally staying because of the actions that have been taken,” Powell said at a news conference Wednesday when he was asked whether his decision would be seen as a political act. “I have long planned to be retiring.”
Powell said his hand was forced because the DOJ’s probe into cost overruns tied to the Fed’s renovation of its headquarters was such a transparent bid to strong-arm him into compliance with Trump’s demands.
In March, U.S. District Judge James Boasberg blocked subpoenas issued in that criminal investigation because, he said, there was “essentially zero evidence” to suspect Powell of a crime. “There is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will,” Boasberg wrote in that ruling.
Last week the Justice Department indicated that it is dropping its investigation into Powell but said that it could restart the probe, and White House press secretary Karoline Leavitt said the investigation was “not necessarily dropped” but instead was “just being moved over to the inspector general.” Powell said he’s waiting until the investigation is “well and truly over, with finality and transparency.”
In his news conference, Powell said, “I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.”
Zeeshan Aleem is a writer and editor for MS NOW. He primarily writes about politics and foreign policy.
