Top economist Mohamed El-Erian has broken with convention by publicly calling for Federal Reserve Chair Jerome Powell’s resignation, citing concerns about the central bank’s independence and credibility. El-Erian believes that Powell should step aside to protect the institution from multiplying political attacks and defend its autonomy.
El-Erian, who is an inflation hawk and has been critical of Powell’s handling of inflation in the past, shares some views with the White House on the issue. However, he disagrees with President Trump’s demands for rate cuts, which El-Erian sees as a way to spur the economy ahead of the 2026 elections.
El-Erian points to several missteps by Powell, including the Fed’s assertion that inflation was “transitory” in 2021-2022, which delayed rate hikes and contributed to price spikes. He also criticizes Powell’s handling of the $2.5 billion office renovation at the Fed’s headquarters, which Trump has accused Powell of mismanaging.
However, El-Erian’s main concern is the erosion of public confidence in the central bank due to institutional scandals and insider trading scandals involving senior Fed officials. He argues that these scandals have harmed the Fed’s credibility and that continuing attacks on Powell will lead to a weakened dollar, higher interest rates, and a more volatile yield curve.
The Federal Reserve Chair’s term expires in May 2026, but El-Erian believes that Powell is already in a weakened position, making him a “lame duck” who cannot steer policy effectively. El-Erian predicts that further attacks on the Fed will escalate if Powell remains in his role, increasing the risk of lasting reputational harm to the institution.
El-Erian’s comments have added fuel to speculation about potential leadership changes at the Federal Reserve, and experts warn that markets could be affected by a weakening of central bank independence.
Source: https://fortune.com/2025/07/22/jerome-powell-should-resign-top-economist-mohamed-el-erian-insider-trading-scandal