Powell Clarifies: U.S. President Cannot Dismiss Fed Board Members

Federal Reserve Chair Jerome Powell has clarified that, according to the law, the U.S. President cannot dismiss members of the Federal Reserve Board. This statement comes amidst ongoing discussions about the independence of the central bank and its role in shaping monetary policy.

The Federal Reserve Act, enacted in 1913, established the Federal Reserve System and outlined the terms of service for its board members. The law states that board members serve 14-year terms, which are staggered to ensure continuity and independence. This structure is designed to insulate the central bank from political pressure and maintain its independence in setting monetary policy.

Powell's statement underscores the importance of the Federal Reserve's independence in maintaining the stability and integrity of the U.S. financial system. The central bank's ability to make decisions based on economic data and analysis, rather than political considerations, is a key factor in promoting economic growth and preventing inflation.

The Federal Reserve Board is responsible for overseeing the nation's banking system, implementing monetary policy, and supervising financial institutions. Its independence is a critical aspect of its ability to fulfill these responsibilities effectively. By emphasizing the legal protections for board members, Powell has reaffirmed the Federal Reserve's commitment to maintaining its independence and fulfilling its mandate to promote maximum employment, stable prices, and moderate long-term interest rates.