Powell should resign to protect Federal Reserve, says top economist

Mohamed El-Erian, a respected voice in the bond market, believes Federal Reserve Chair Jerome Powell should step down to protect the institution's independence. The White House has been increasing its attacks on Powell, putting the Fed's independence at risk. El-Erian thinks Powell's departure would be better than allowing the attacks to continue and multiply. Powell's term expires next May, and his replacement will be announced by the end of this year, making him a "lame duck" anyway. El-Erian views Treasury Secretary Scott Bessent's recent comments as a red flag, signaling the administration's intent to attack the entire Federal Reserve institution. El-Erian criticizes Powell's record, citing policy mistakes and an insider trading scandal under his leadership. Powell's slow response to inflation and the subsequent banking crisis have been particularly damaging. El-Erian argues that the Fed, like any institution, needs revision and improvement. If threats to Fed independence continue, it could result in a weaker dollar, steeper yield curve, and higher interest rates, ultimately affecting market stability. El-Erian's bottom line is that Powell should step down to safeguard the Fed's independence and prevent further damage to the institution's credibility and market stability.