- Fed Chair Jerome Powell’s resignation could protect Fed independence, some economists say.
- Trump has criticized Powell for not cutting rates and for costs associated with renovating the Fed building.
- Mohamed El-Erian and Jeremy Siegel said Powell stepping down could preserve
President Donald Trump and administration officials have been calling for Fed Chair Jerome Powell to step down, and now some mainstream economists are backing those calls.
While market experts have feared that removing Powell would hurth Fed independence, some economists are arguing that Powell’s resignation could actually save it.
In an X post on Tuesday morning, Mohamed El-Erian, economist and former CEO of PIMCO, voiced his support for Powell’s resignation.
El-Erian’s call comes after Treasury Secretary Scott Bessent called for an internal review of the Federal Reserve in an X post on Monday, arguing that “significant mission creep and institutional growth have taken the Fed into areas that potentially jeopardize the independence of its core monetary policy mission.”
For El-Erian, Bessent’s recent comments indicated that the Fed’s reputation was being eroded as controversies around Powell spread from just the Fed Chair to the rest of the institution, especially in light of the criticism over the Fed’s building renovations.
While El-Erian said Powell's resignation wouldn't be the most ideal outcome, "it's better than what is playing out now — growing and broadening threats to Fed independence — and will undoubtedly increase should he remain in office."
"As to market reaction, most of the frequently mentioned candidates to replace Chair Powell would be able to calm any potential market jitters," El-Erian added.
This morning, US government criticism of both Federal Reserve Chair Powell and the institution itself has broadened to include "mission creep" and the effectiveness of other officials.
The developments of the last few days reinforce my view:
If Chair Powell's objective is to…— Mohamed A. El-Erian (@elerianm) July 22, 2025
El-Erian isn't the only economist who thinks the central bank would be well-served by Powell's resignation. Wharton economist Jeremy Siegel expressed similar sentiments last Friday.
"I'm very worried about the independence of the Fed," Siegel said on CNBC. "The long term independence of the Fed may very well be enhanced if he steps down."
If the economy deteriorates in the second half of the year, Trump has the "perfect scapegoat" in Jerome Powell, whom he can blame for not lowering rates early enough, according to Siegel. Siegel's concerned that Trump could also use the situation as leverage to convince Congress to give him more power over the Fed.
Siegel believes Kevin Hasset and Kevin Warsh could both be good candidates to replace Powell.
Besset, for his part, said on Tuesday that he does not think that Powell should resign, offering a more measured view of the Fed chief's performance compared to Trump's scathing comments.
"There's nothing that tells me that he should step down right now," Bessent said on Fox Business on Tuesday morning. "His term ends in May. If he wants to see that through, I think he should. If he wants to leave early, I think he should."