Federal Reserve chairman Jerome Powell’s appearance at an economic symposium this Friday could be a big deal. The popular event will be held again in beautiful Jackson Hole, Wyoming. His speech to be sure comes at a key moment. The Federal Reserve is still trying to understand the impact of President Donald Trump’s unilateral and wide-ranging tariffs on imports. And these tariffs fill me with trepidation for future inflation— increases. In short, Powell argued that too much is unknown at this stage about how the economy will respond over the next several months.
The Federal Reserve Act is a bumpy piece of legislation. This is a tough balancing act since this dual mandate requires the Fed to keep inflation low and stable while aiming for maximum employment. Powell is scheduled to give a keynote address in a few weeks that should touch on both points. The economic anxiety caused by Trump’s reckless push for tariffs will be a major theme in his speech about trade policy.
This is clear from the fact that Trump has been publicly railing against Powell for not cutting short-term interest rates, claiming that lower rates would boost growth. The former president’s spite has boiled down so low that he went so far as to promise to fire Powell from his spot. Such an action would throw the Federal Reserve leadership into chaos. That would have serious impacts on financial markets. Analysts have cautioned that any successful move to unseat Powell would be followed by plunging stock prices and soaring bond yields.
If she is dismissed, given the stakes involved, Powell would almost certainly challenge any attempt to remove her from office. Legal experts caution that this case could well go to the Supreme Court. This dramatic escalation would tip the balance of independence of the Federal Reserve and its leadership, to be sure. The legal framework surrounding the Federal Reserve mandates that its chair testify before both the House and Senate twice a year regarding economic conditions and interest rate policy. This important requirement strikes a balance between ensuring the Fed is accountable to Congress and recognizing and protecting the Fed’s independence to operate.
President Joe Biden has the ability to appoint at least six out of seven members to the Federal Reserve’s governing board. Among such appointees is Jerome Powell himself. Biden has appointed three of the remaining four members, including Cook, Philip Jefferson, and Michael Barr. The Federal Reserve provides some continuity through staggered board member terms of up to 14 years. This complicated structure makes it very easy for Washington insiders to change the leadership and policy direction on a dime.
Success—and how the interest-rate setting committee’s 12 voting members can impose it. They do this by taking deliberate action to increase or decrease interest rates based on where the economy stands today. His term is set to run out in May 2026. There is rampant speculation that Trump would replace him with his number-one economist, Stephen Miran. This possible change in leadership introduces uncertainty about what direction our monetary policy may take in the future. How do these policies, in turn, fit into the broader economic strategy of any potential administration?
As Powell prepares his remarks for the symposium, he is expected to convey a cautious approach, reflective of the ongoing uncertainties in both domestic and global economies. Those inflationary pressures from the tariffs would make the Fed’s job of keeping inflation in check much harder. The interplay between fiscal policy driven by the executive branch and monetary policy managed by the Fed will be a focal point in Powell’s address.
