Powell warns Fed credibility at risk if presidents can fire officials

Jerome H. Powell used a high-profile award ceremony in Boston to warn that the Federal Reserve’s independence is not an abstract constitutional nicety but a safeguard that helps keep prices, borrowing costs and long-term expectations stable for ordinary Americans.

Speaking May 31 at the John F. Kennedy Presidential Library and Museum while accepting the 2026 Profile in Courage Award, Powell said the central bank would lose the credibility needed to support a strong and stable economy if any president were free to remove Fed officials because of policy disagreements. Powell, who remains a Federal Reserve governor after stepping down as chair earlier this month, described that independence as a “priceless asset.”

The warning landed at a moment when the Fed is already under intense political scrutiny. Powell’s remarks pointed to the danger of a precedent in which one administration could fire officials over policy differences and the next would do the same, leaving markets to wonder whether interest-rate decisions were being made to fight inflation or to satisfy the White House. When that credibility weakens, investors demand more compensation for risk, households and businesses face higher borrowing costs, and inflation expectations can become harder to contain.

The Federal Reserve was created in 1913, and since then its structure has rested on a difficult balance: enough independence to make unpopular decisions, and enough accountability to remain answerable to the public and Congress. That tension has shaped nearly every major debate over the central bank’s role, especially after the inflation shocks of the 1970s and the hard anti-inflation campaign of the early 1980s. Congressional research has long linked greater central-bank independence with lower inflation and better long-run economic outcomes.

The Kennedy Library said Powell was honored for protecting the independence of the Federal Reserve despite years of personal attacks and threats from the highest levels of government. The same 2026 award also recognized the people of the Twin Cities, Minnesota, for risking their lives to protect neighbors and immigrant community members during an unprecedented federal law-enforcement operation. Four local leaders were selected to accept that award on behalf of residents in Minneapolis, St. Paul and surrounding communities.

For Powell, the message in Boston was clear: if the Fed’s independence can be bent by political pressure, the costs will not stay in Washington. They will show up in markets, in mortgages, in business loans and in the credibility that keeps inflation from taking root.