In a surprising turn, top economist Mohamed El-Erian has broken with convention among financial leaders by publicly calling for Federal Reserve Chair Jerome Powell to resign. El-Erian’s comments, issued via social media and elaborated in press interviews, are remarkable not only for their candor, but for their counterintuitive reasoning: El-Erian believes Powell should step aside to protect the institution’s independence in the face of multiplying political attacks. Most financial leaders who are insisting that Powell resist the pressure he’s facing from Trump are the exact opposite, citing central bank independence as the reason Powell must stay.
As the White House has ratcheted up its criticism of Powell, speculation has grown about potential leadership changes at the Federal Reserve. Donald Trump has been outspoken in his demands that Powell cut interest rates, a concern that El-Erian shares. But the scandal advanced by the Trump administration over Powell’s oversight of a $2.5 billion office renovation is not part of El-Erian’s critique.
