ROI-Powell's greatest legacy? Becoming the Fed Defender-in-Chief: McGeever

As Jerome Powell prepares to chair what is almost certainly his final Federal Reserve ​policy meeting, debate is raging about the merits of his eight-year tenure and his place in the 113-year-old institution's pantheon. From ​an economic standpoint, the case for ranking him highly is strong, despite a few ‌notable stumbles. ​As a defender of the Fed's independence, he stands near the top.

His infamous claim that elevated inflation in 2022 would be "transitory" proved to be wrong, although he wasn't alone as many policymakers around the world shared his view. Four years on, inflation remains above the Fed's 2% target, and is rising. Some critics also note that the Fed's balance sheet doubled under his watch to a record $9 ‌trillion, as the central bank fired its policy bazookas to support the economy after the pandemic. Some argue the Fed went too far with quantitative easing and was too slow to reverse it, though the effects of that are hard to quantify.

Critics also claim the Fed's rate cuts in the run up to the 2024 presidential election were politically motivated, a charge Powell vehemently denies. Ultimately, when reviewing the Fed's policy decisions under Powell's direction, especially when considering that they were made amid a global pandemic, a technological revolution, trade wars and real wars, the case for ranking ‌him highly is pretty strong.

It gets stronger still when considering his legacy as a defender of Fed independence. STANDING UP TO PRESSURE

That legacy is partly due to circumstance. President Donald Trump's personal attacks on Powell and his leadership of the Fed have been without precedent, ‌both in quantity and ferocity. The number of social media posts and public comments slamming Powell for not lowering interest rates quickly enough must run into the hundreds. Trump repeatedly threatened to fire him, and there was also the now-rescinded indictment related to Powell's testimony about renovations to the Fed headquarters, the Eccles Building in Washington.

The last time a sitting Fed chair faced such intense political pressure was more than 50 years ago, when President Richard Nixon leaned heavily on Arthur Burns to keep monetary policy loose. Powell isn't alone in refusing to acquiesce to presidential power. William McChesney Martin Jr., Fed Chair from 1951-1970, famously defied Lyndon Johnson's calls not to raise rates, But McChesney Martin didn't face ⁠a near-daily barrage ​of public attacks or threats of criminal charges.

Powell has largely refused to ⁠respond to Trump's barbs, but on two occasions - both on camera - he pushed back in ways that will long be remembered. VIRAL VIDEOS

The first was on July 24 last year – and it was almost comical. The two men, both wearing white hard hats, stood beside each other at the Fed's headquarters to face the media. Trump criticized the ⁠cost of the building's renovations, and in visible disbelief, Powell told him his figures were wrong. The scene was almost comical, equal parts awkward and unintentionally funny.

The second occasion was much more serious in tone. On January 11, the Fed issued an extraordinary recorded video message of Powell responding to the Department of ​Justice threat of indictment. He made clear he believed it was motivated by the Fed's refusal to bow to Trump's demands for lower rates. "This is about whether the Fed will be able to continue to set interest rates based on ⁠evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation," Powell said somberly.

Trump has publicly berated many prominent figures in business and politics. Few have pushed back, especially in the world of business and public policy. Why did Powell resist? It may be because he's an institutionalist and a firm believer in the ⁠central ​bank's independence, a long-standing Republican but respectful of the bipartisan Washington machine.

He seems to have the backing of the public, too. A Gallup poll in December showed that Powell was the most popular U.S. official among the 13 policymakers and lawmakers in the survey, with a 44% approval rating. He also scored the highest among Independents. DEFENDER-IN-CHIEF

When debating Powell's legacy, some things are inarguable. The U.S. economy returned to trend growth after the pandemic quicker than other G7 economies, and, as Powell's presumptive replacement Kevin Warsh recognized last week, the country is now close to ⁠full employment.

Powell obviously can't take all the credit. But it is fair to say the Fed under his leadership helped secure that outcome which, at a broad macro level, most policymakers would welcome. In July 2023, with interest rates above 5%, I wrote a ⁠column suggesting that if the U.S. economy had a 'soft landing' - no recession with ⁠inflation near target - and only a mild downturn in 2024 with unemployment still historically low, "Powell may lay claim to being the most successful Fed chief in history."

That scenario largely played out, and he would subsequently emerge as the Fed's foremost defender-in-chief. (The opinions expressed here are those of the author, a columnist for Reuters)

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(By Jamie McGeever Editing by Marguerita Choy)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)