When asked if the Federal Reserve can truly stay independent in the face of mounting political pressure, Jerome Powell didn’t hedge.
The Fed chair’s remark came during a tense press conference where he faced a volley of questions about two controversies: US President Donald Trump’s attempt to fire Governor Lisa Cook and the unusual appointment of Stephen Miran, who has joined the Fed while still technically holding his White House role. Both moves have sparked sharp criticism from economists who warn they could blur the lines between politics and monetary policy.
Powell, though, refused to take the bait. “We’re strongly committed to maintaining our independence,” he said when pressed on Miran’s dual role. On the Cook case, he called it a court matter and declined to go further.
'It’s deeply in our culture'
For Powell, the way to measure independence isn’t in political fights but in the Fed’s work itself.
“It’s deeply in our culture to do our work based on the incoming data and never consider anything else. Everybody who’s been at the Fed feels really strongly about that. You’ll know it by the way we talk about what we’re doing, by the speeches that people give, by the decisions that we make.”
He acknowledged that Washington is a political town, but drew a line around the Fed:
“We don’t frame these questions at all or see them in terms of political outcomes. When you get to another part of Washington, everything is seen through the lens of politics. People find it hard to believe that is not at all how we think about things at the Fed.”
Trump’s shadow over the Fed
The questions Powell avoided speak volumes about the environment the central bank is navigating. Trump has openly sought to reshape the Fed, replacing a resigned voting member with a critic from his administration and moving to oust Cook, one of Biden’s nominees.
Miran’s appointment, in particular, has raised eyebrows. By staying on leave rather than resigning from his White House job, he straddles both the political and monetary worlds, an arrangement that former officials across the political spectrum say risks undermining the Fed’s credibility.
Powell refused to engage on those specifics. But he was clear on the broader principle: “I don’t believe we’ll ever get to that place [of politicisation]. We’re doing our work exactly as we always have now.”
Independence as risk management
The insistence on independence comes at a pivotal time. The Fed has just delivered a quarter-point rate cut, a move Powell described as 'risk management' rather than an emergency response. Inflation remains pressured by tariffs, while the labor market is cooling, a combination Powell called 'an unusual situation' with no risk-free path.
That’s why the credibility of the institution matters. Investors and households need to trust that decisions are based on economic data, not White House demands.
For Powell, the answer is in the Fed’s track record: “Everything we do is in service to our public mission.”
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