Washington (United States) (AFP) – US Federal Reserve Chair Jerome Powell, a soft-spoken central banker who chooses his words carefully, is perhaps an unlikely candidate to become one of the few figures who have stood up to President Donald Trump. Nevertheless, after months of insults, abuse, and pressure to lower interest rates, Powell on Wednesday will address what is likely his last press conference as Fed chief — where he is seen by many as having prevailed over the browbeating Republican.
In a statement in January, Powell revealed that Trump’s Justice Department had opened an unprecedented investigation into him and the Fed over cost overruns related to building renovations. At the time, he warned the probe should “be seen in the broader context of the administration’s threats and ongoing pressure.” Now, almost four months later, the tables have turned dramatically. The Justice Department said Friday it would drop the probe, which was seen as part of a wider effort to pressure the Fed — after Trump attempted to unseat Fed Governor Lisa Cook over mortgage fraud allegations.
A key Republican senator had vowed not to clear the president’s nominee to replace Powell, Kevin Warsh, unless the investigation was over. Powell, too, said in March he would not leave the Fed board — where his term as a governor, but not chair, concludes in January 2028 — as long as the probe was ongoing. The fact that Powell felt the need to respond forcefully in January conveyed “just how serious the issue is,” said Jason Furman, a top economic adviser to former US president Barack Obama.
Now, all eyes will be on Powell on Wednesday to see if he will choose to continue on the board past his time as chair, a move that would be unusual but not unprecedented. It would also deny Trump an additional nomination to the powerful committee. “We continue to believe he is more likely than not to remain on the Board,” said EY-Parthenon chief economist Gregory Daco. “The rationale is institutional continuity, not politics.”
– Praise and criticism –
Powell, a 73-year-old former investment banker, took the helm at the Fed in 2018 after he was tapped by Trump to replace Janet Yellen. It was Trump’s first presidency. Powell then withstood months of withering attacks from Trump for raising interest rates. When Covid-19 took hold in 2020, the Fed rapidly slashed its benchmark rate to zero and rolled out new support measures, moves that helped to prevent a more severe economic downturn. His tenure won him praise and criticism from all sides as he maintained the central bank’s independence.
Over that tumultuous period, Powell, who is also called “Jay,” managed to forge consensus among the diverse members of the Fed’s rate-setting committee. In 2021, the wealthy Republican with no formal economics training was nominated by Democratic President Joe Biden to lead the Fed for a second term. He proceeded to oversee a series of sharp rate hikes in 2022 to curb surging inflation after the pandemic, before beginning to cautiously lower rates again in 2024 and 2025 as he eyed the price effects from Trump’s sweeping new tariffs.
– ‘The guy who stood up’ –
As Trump returned to office, Powell again came under fire as the president lashed out — this time for not lowering interest rates more aggressively. Trump has called Powell a “numbskull” and a “moron,” and in July went so far as to suggest he could be dismissed for “fraud” over the handling of a $2.5 billion renovation project at the Fed’s headquarters. Since Trump returned to the White House, Powell has proven willing to compromise in certain areas, such as by pulling back on the Fed’s work on climate change.
Brookings senior fellow David Wessel expects that Powell’s forceful response to the president will cement his legacy as “a Fed chair with a spine.” “He will be seen as the guy who stood up for the independence of the Fed, and the rule of law,” Wessel told AFP. Prior to his appointment to the central bank in 2012 by then-president Obama, Powell was a scholar at the Bipartisan Policy Center think tank. The native of Washington earlier served in the US Treasury Department for a brief period under Republican President George H.W. Bush.
© 2024 AFP
