By Ann Saphir
March 21 (Reuters) – Federal Reserve Chair Jerome Powell on Saturday lauded former Fed Chair Paul Volcker’s “willingness to resist” political pressure as he fought inflation in the 1980s, remarks that have particular resonance as Powell presses his own defense of the Fed’s independence amid the Trump administration’s efforts to get him to lower rates.
Volcker ignored his critics and raised interest rates sharply in the early 1980s, triggering a recession but also returning the U.S. economy to price stability.
“His actions remind us that independence and integrity are inseparable—we need independence to do what is right, and we need integrity to use that independence wisely,” Powell said in a taped video accepting the Paul A. Volcker Public Integrity Award.
Over the past year Powell has fought his own political battles over Fed independence, with Trump frequently berating him for not easing policy and threatening to try to oust him.
Trump has also tried to fire Fed Governor Lisa Cook over alleged mortgage fraud, a move she is fighting in a case now before the Supreme Court.
In January, the Department of Justice opened a criminal probe into Powell’s handling of renovations to the Fed’s Washington headquarters, a development Powell says is an attempt to intimidate him into setting policy as the president wants.
On Wednesday Powell pledged not to leave the central bank until the probe is resolved, putting a wrench into Trump’s hopes of soon replacing him with a central bank chief sympathetic to his demands for lower interest rates. Fed chairs typically resign when their leadership terms are up, as Powell’s is on May 15.
A top Republican has also vowed a hold on Trump’s nominee to replace Powell, former Fed governor Kevin Warsh, as long as the DOJ probe remains open.
“Ultimately, each of us will want to look back at the arc of our lives and know that we did what was the right thing,” Powell said. “As Paul Volcker showed throughout his career, in the end, our integrity is all we have.”
(Reporting by Ann Saphir; editing by Diane Craft)
