As Jerome Powell steps down, his legacy hangs on one fight: keeping the Fed independent
Jerome Powell’s – As Jerome Powell leaves the Federal Reserve chairmanship on Friday after eight years, economists credit him for guiding the economy through pandemic turmoil and later shocks, while saying his lasting mark may be the way he defended the Fed’s independence amid
When Jerome Powell steps down as chair of the Federal Reserve on Friday. the timing feels almost scripted by the conflict that has shadowed his tenure.. The Fed’s top job is changing hands, but Powell is not leaving the institution entirely.. He plans to stay as a Federal Reserve governor. arguing the central bank remains “at risk” from legal challenges by the Trump administration.
More than a dozen economists interviewed by CBS News say the defining theme of Powell’s eight years will be his insistence on the Fed’s independence—especially as he faced legal threats and repeated pressure from President Trump to lower interest rates.. Still. they also say his record on inflation remains disputed. with some calling his early hesitation to tighten monetary policy a costly misstep even as others credit him with steering the economy toward what became an “improbably” soft landing.
Powell’s most enduring legacy. David Wessel of the Brookings Institution said. is that he “protected the Fed’s independence at a time of unprecedented challenges.” Wessel added that Powell’s steadiness ensured the American public had “the reassurance that there was an adult of integrity in charge of the world’s most powerful economic institution.”
Under Powell. the Fed performed “an admirable job of managing monetary policy through a tumultuous period. more or less achieving its dual mandate. ” said Moody’s Analytics chief economist Mark Zandi.. But Zandi pointed to what he called Powell’s most significant achievement as the end of his tenure approached: “his yeoman efforts to maintain the Fed’s independence.”
That independence fight has been personal, too. Powell said at an April 29 press conference that he was staying on as a governor because the Fed is “at risk” from legal challenges. “The institution is being battered over these things,” he said.
The next chair is set to be Kevin Warsh, a former Fed official hand-picked by President Trump.. In a move that stands out for a former Fed chair. Powell will remain on the board of governors. and as one of 12 voting members of the Federal Open Market Committee. he will keep a direct role in monetary policy decisions.
The Trump factor, from praise to insults and pressure
Powell’s relationship with Trump has shifted sharply over time. When the president nominated him to succeed Janet Yellen as Fed chair in February 2018, Trump praised Powell as having “the wisdom and leadership to guide our economy.”
But the relationship cooled when the Fed began hiking its benchmark interest rate in 2018 to prevent the economy from overheating.. From there, Trump’s attacks on Powell intensified.. In his second term, the president repeatedly denigrated Powell, calling him a “numbskull” and a “complete moron,” among other insults.
The pandemic briefly overwhelmed that hostility.. As the U.S.. plunged into a brief but historically steep recession in 2020, unemployment soared to almost 15%.. Powell oversaw two emergency meetings of the Federal Open Market Committee in March 2020. cutting the benchmark rate to close to zero and helping stabilize the labor market.
Liz Pancotti of Groundworks said Powell “kept the economy resilient throughout the pandemic and, in combination with robust fiscal policy through COVID-era stimulus legislation, supported workers when they needed it most.”
Even amid that crisis management credit, the inflation surge that followed became the most contentious part of his record.
Inflation, and the early call that became a turning point
Economists say Powell’s biggest misstep came as inflation rose to the fiercest levels since the early 1980s.. As prices began to lift off in 2021. Powell initially described inflation as “transitory. ” attributing it to temporary factors such as snarled global supply chains rather than deeper structural causes like labor shortages or low borrowing rates.
Fed officials held off on raising rates until March 2022, by which point the Consumer Price Index had already reached an annual rate of 8.5%.
That delay, economists told CBS News, represented a missed and costly opportunity. Wall Street analyst Adam Crisafulli of Vital Knowledge described Powell’s inflation record as “very mixed,” saying the Fed overshot its target “for the last several consecutive years.”
Crisafulli acknowledged the role of shocks outside the Fed’s control. citing COVID. COVID-era fiscal policy. the Ukraine/Iran wars. and tariffs.. But he said history often focuses less on that nuance: “Powell’s hesitation in pushing for higher rates reflects the Fed’s emphasis on the employment side of its dual mandate. ” Tim Duy. chief economist at SGH Macro Advisors. said.
Under the mandate, Duy noted, the Fed must balance stable prices with maximum employment.. Over the last five years. he said. the Fed has struggled to achieve both goals simultaneously—“Inflation has remained above target for more than five years. while unemployment has stayed low for most of that period.”
An “improbably” gentle path after the worst of it
Despite the inflation concerns, economists credit Powell with helping engineer what many describe as a soft landing. With inflation in 2022 at a 40-year high and the labor market still under pressure, economists feared the U.S. could tip into recession.
Instead, Powell and other Fed officials raised interest rates enough to tame inflation without sparking a major spike in unemployment. Economists said that accomplishment mattered because the Fed has often triggered recessions in its attempts to cool borrowing costs.
Michael Luzzetti of Deutsche Bank called the outcome a standout: “Navigating the COVID-driven inflation shock without triggering a recession and maintaining — if not enhancing — the Fed’s inflation-fighting credibility is. in my view. Powell’s greatest success.” Luzzetti pointed to the sequence of results: the economy continued growing. the jobless rate declined to a 50-year low. and inflation ebbed.
Even so, they said the nation still has not returned to the Fed’s 2% annual target. In his final press conference, Powell emphasized that goal remains central.
More shocks under the second Trump term, and new legal pressure on the Fed
Powell’s tenure did not end with inflation’s first act. During President Trump’s second term, tariffs raised concerns about their potential effects on inflation and broader economic growth. Then the Iran war pushed oil prices higher, contributing to the highest inflation rate in almost three years.
In April, the Consumer Price Index reached an annual rate of 3.8%, the highest since May 2023.
Greg Daco. chief economist at EY-Parthenon. said Powell’s leadership of the FOMC “will likely be remembered as pragmatic. disciplined and unusually adaptive during one of the most volatile macroeconomic periods in decades.” Daco argued that flexibility helped the Fed navigate extraordinary uncertainty while preserving credibility and reinforcing the importance of institutional independence.
But institutional independence has been under direct attack. Trump has called Powell a “lousy” Fed chair, criticized him for failing to cut interest rates, and launched legal attacks.
In January, the Department of Justice launched a criminal investigation into Powell over Federal Reserve building renovations. Powell called the probe a pretext meant to pressure the Fed to lower interest rates in line with the president’s wishes.
The Justice Department later dropped the probe. Even so, Powell said last month he would remain a Fed governor.
His future influence, and what comes after his obituary
Powell’s immediate job change is clear: he will leave the chairmanship, but he will remain in the policy process as a governor with voting power on the FOMC.
Crisafulli put it more sharply, saying Powell’s “ultimate story isn’t yet known.” If Powell preserves monetary independence, Crisafulli said, that would be “the opening line of his obituary”—not the “at best, mixed track record of inflation” during his tenure.
For now, the battle that shaped his time at the Fed is the one he says is still unfinished.. With a Trump-selected successor poised to take over. Powell’s last act inside the central bank is to stay and argue the institution is still being pressed from the outside—just as the country watches whether the next chapter of U.S.. monetary policy keeps its distance from politics.
Jerome Powell Federal Reserve Fed independence Kevin Warsh monetary policy inflation soft landing FOMC Trump administration Department of Justice investigation tariffs CPI