The Federal Reserve’s independence is hanging by a thread in the age of Trump

Jerome Powell, who stepped down this week as chair of the Federal Reserve , had his hits and misses. The Fed was late to react as prices started rising when the Covid pandemic abated, but they eventually acted forcefully and achieved the most rare of feats: a “soft landing”, curbing inflation without sparking a recession or damaging employment. Strangely, given the chaotic era of pandemic and tariffs that coincided with Powell’s time as chair, monetary policy may not define his legacy. Powell’s most lasting accomplishment will most likely be his outspoken efforts to defend the independence of the Fed from an assault by the imperial presidency of Donald Trump. That job, unfortunately, is not done. The chair managed the president smoothly, ignoring his demands to slash interest rates at every turn. When Trump went for the jugular, threatening to indict Powell over the spurious charge of lying to Congress about the cost of refurbishing the Fed’s headquarters, he pushed back, refusing to step down and publicly condemning Trump’s real motivation: payback. “The best thing Jay Powell did for the Fed’s independence is that he just did the job as you are supposed to do it,” said Austan Goolsbee, president of the Federal Reserve Bank of Chicago. “Nobody knew how the Fed would respond under direct attack. …