Jerome Powell’s eight-year tenure at the Federal Reserve ended with a mix of policy fights and political tension, according to coverage reviewed by The Associated Press. When Powell became chair eight years ago, economists worried that inflation and interest rates were too low while employment was too weak for broad-based hiring. By the time Powell stepped down, inflation had surged after the pandemic and stayed above the Fed’s 2% goal for more than five years, raising the cost pressures that voters felt in rents, cars and groceries.
In his final days, Powell was named chair pro tempore and said he would continue serving on the Fed’s governing board until he was confident that the central bank’s independence had been restored. Powell’s approach to defending that independence—described in the AP account as a central theme of his legacy—also included pushing back against political and legal pressure. The AP report said that in January Powell pushed back against an “unprecedented” legal investigation by the Justice Department, and it framed that action as another example of a top official resisting the Trump White House.
Powell’s record also included an early period in which inflation-fighting was delayed while the Fed supported the economy during pandemic disruptions. The AP account describes two moves in March 2020 in which the Fed slashed its benchmark interest rate by 1.5 percentage points to near zero, while also buying large amounts of Treasury debt and government-backed mortgage securities to reduce longer-term rates and support credit markets. In April 2020, the report said Powell told lawmakers that the Fed would “continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery.”
At the same time, the AP account said Powell and other Fed officials initially treated the inflation surge as “transitory,” describing it as stemming from supply chain disruptions tied to the pandemic. The report said the Fed kept its key rate near zero until March 2022, when inflation hit 6.9% according to the Fed’s preferred measure, before raising rates in the steepest campaign since the early 1980s. The period set up a later debate about whether the Fed’s patience allowed inflation to take root, and the AP account quoted critics saying the Fed misread the underlying drivers of demand.
Critics cited in the AP report argued that the Fed’s early stance contributed to inflation that persisted even as other conditions changed. Mickey Levy, described as a former top economist at Bank of America and a visiting fellow at the Hoover Institution, said that even with data indicating aggregate demand was surging, the Fed still said the problem was a transitory supply shock. The AP account also described that after inflation spread into items such as apartment rents and surveys showed Americans increasingly worried it would last, Powell oversaw the sharp shift toward tighter policy to combat the price spike.
The AP account said the tighter policy delivered what economists call a “soft landing,” with inflation dropping to 2.3% by September 2024 according to the Fed’s preferred measure, nearly reaching the target. It also said inflation later moved higher after Trump imposed sweeping tariffs last April. Another strand of the legacy described by AP focused on jobs: the report said Powell began his term when the Fed’s maximum employment mandate was front and center, even before the pandemic, and that some economists argued that emphasis contributed to the delayed response to post-COVID inflation.
The AP report described Powell citing the employment rate as one reason to avoid hiking rates too early. It said that in an August 2021 speech Powell pointed to an unemployment rate of 5.4% as a reason the Fed should not tighten prematurely, while other analysts defended him by arguing that there were no signs inflation was worsening before that point. Julia Coronado, president of MacroPolicy Perspectives and a former Fed economist, was quoted in the AP account arguing that Powell was right to push harder for longer with no inflation consequences, and the report also said Powell later pushed back, saying “overweighting the employment market” had nothing to do with the inflation spike.
For Powell’s relationship with politicians, AP highlighted a moment from last July that it described as likely to stand out in his tenure’s lasting images. It said Powell and Trump posed for cameras in hard hats at the Fed’s extensive $2.5 billion building renovation—an effort Trump criticized as excessive—when Trump claimed the project would cost $3.1 billion. AP said Powell took out reading glasses and corrected Trump on camera by noting that Trump had included a third building that had already been renovated.
The report also described Powell’s broader efforts to build ties with Congress and noted research by University of Maryland economist Thomas Drechsel that found Powell met with senators more than twice as often as his two predecessors, with meetings split evenly between parties. It said that relationship-building helped in the process of considering Powell’s successor, and it described a scenario in which a North Carolina Republican senator, Thom Tillis, effectively blocked Senate approval of Trump’s pick Kevin Warsh until a Justice Department investigation of the building project was dropped; the AP account said the Justice Department eventually gave up on the probe. Don Kohn, a former vice chair of the Fed, was quoted saying the “big plus” was how Powell protected central bank independence, calling it the most important element for the future and for protecting the public interest in having an independent central bank.
Powell hasn’t said when he will leave the Fed, the AP account said, adding that he could remain on the governing board until January 2028. At his last news conference, the report said Powell told reporters, “You want people to … set interest rates to benefit the general public, and focus only on that and ignore political considerations. This isn’t bipartisan, this is nonpartisan.”