Former Fed Chair Powell warns politicising central bank would erode credibility

Former Federal Reserve Chair Jerome Powell, speaking at a John F. Kennedy Library award ceremony in Boston, said the US central bank must be shielded from political interference. According to MarketWatch, Powell warned that the Fed's 'institutional credibility could erode under political pressure' and stressed that monetary-policy decisions must rest on economic data rather than political calculations.

The speech follows months of public criticism from the Trump administration aimed at the current Fed chair and Federal Open Market Committee decisions. Without naming individuals, Powell said 'political winds exist in every era, but Fed independence is essential for long-term stability.' Investors note that a perception of politically driven rate decisions could lift risk premia in the dollar and Treasury markets.

The remarks land ahead of the Fed's 17-18 June meeting, watched closely by current chair Kevin Warsh, and add another layer to an active political debate. Powell explicitly referenced the 1951 Treasury-Fed Accord, reminding the audience that institutional distance from political branches has long underpinned US economic stability. This article is not investment advice; capital-market decisions should be made with licensed advisers.