Jerome Powell Says Federal Reserve's Independence Is 'At Risk'
Jerome Powell stated at the last FOMC chair press conference that the Federal Reserve's monetary policy independence is "at risk" due to legal attacks.
Powell pointed out that the institution is forced to resort to the courts to maintain its ability to make decisions without political interference and has decided to remain on the board for a period after his term ends on May 15.
Market participants are repricing policy uncertainty, shifting funds from interest rate-sensitive assets to safe havens or sectors benefiting from Trump’s policies, leading to increased volatility in risk assets and putting pressure on traditional defenders of Fed independence.
Source: Public Information
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Jerome Powell has faced various challenges since becoming chair in 2018, including rate cuts in 2019, unlimited QE from 2020 to 2022, and aggressive rate hikes in 2022-2023. This public warning continues his strong defense stance amid DOJ investigations and pressure from Trump in 2025-2026, having previously described legal attacks as "excuses".
On the capital front, Powell emphasizes independence during his final term to guide the market in maintaining data-dependent expectations while remaining on the board to buffer the transition. Investors are adjusting their positions towards gold, commodities, and growth stocks, preemptively reallocating in response to potential policy shifts after Kevin Warsh's succession, creating capital flows that reflect short-term hedging and long-term policy games.
Similar to the political pressures during the Volcker era or Greenspan's later defense of independence, Powell is in a mid-transition phase as the Fed shifts from "post-pandemic technical governance" to an "era of enhanced administrative intervention," with his successor Warsh already being promoted.
This essentially represents a regulatory change: the traditional framework of statutory independence is being eroded by ongoing legal and personnel attacks. Powell attempts to lock in the boundaries of "non-political decision-making" through public warnings and his strategy of remaining, restructuring monetary policy from a "central bank autonomous technical orientation" to a "political-legal game-dominated" execution mechanism.