Federal Reserve chairman Jerome Powell should step down in order to protect Fed independence, according to Mohamed El-Erian.
El-Erian is the former CEO of Pimco and Harvard University’s investment division. He now serves as the president of Queen’s College in the UK and writes columns for Bloomberg.
“If Chair Powell’s goal is to preserve the Fed’s operational independence (which I consider crucial), then he should step down,” El-Erian mentioned in a post on X on Tuesday.
In recent months, President Donald Trump has heavily criticized Powell, even giving the Fed chairman the nickname “Too Late” for his hesitation to cut interest rates. Lately, the Trump administration has widened its critique to address the Fed’s renovation projects in Washington, D.C., and Powell’s testimony to Congress regarding the matter.
On Monday, Treasury Secretary Scott Bessent criticized the Fed for “mission creep.” He also questioned the role of Fed economists, describing the Fed’s massive army of analysts as “UBI for academic economists.” El-Erian’s post seemed to respond to these lines of attack.
“This morning, US government criticism of both Federal Reserve Chair Powell and the institution itself has broadened to include ‘mission creep’. and the effectiveness of other officials,” El-Erian said.
“I recognize this isn’t the consensus view, which favors him staying until the end of his tenure in May. Nor is it a first best, which is simply not attainable. Yet, it’s better than what is playing out now – growing and broadening threats to Fed independence – and will undoubtedly increase should he remain in office,” El-Erian added. ” As to market reaction, most of the frequently mentioned candidates to replace Chair Powell would be able to calm any potential market jitters.”
