The Federal Reserve’s independence from political interference, viewed as sacrosanct inside the central bank, is under siege.
President Donald Trump’s relentless attacks on Federal Reserve Chair Jerome Powell are so intense that one prominent economist is raising eyebrows by arguing that Powell should quit to protect the central bank’s independence.
“The attacks on Chair Powell are now extending to the whole institution. The longer Powell stays in power, the more that process will continue, fundamentally threatening the independence of the Fed,” Mohamed El-Erian, the former CEO of bond giant PIMCO, told CNN in a phone interview on Tuesday.
El-Erian, elaborating on a post he made on X, acknowledged his view is outside the consensus and “very unpopular.” But he noted that Powell will effectively become a “lame duck” the moment Trump announces a replacement, something that could happen much earlier than in the past, and that Powell leaving now would spare the Fed from months of attacks.
“The first best is that Powell remains until May when his tenure ends and the administration stops attacking the Fed,” he said in the interview. “But that’s not going to happen. We are nowhere near the world of first bests.”
