Fed independence maintained as least costly step with Powell's resignation: El-Arian
Mohamed El-Erian Calls for Jerome Powell's Resignation to Protect Fed's Independence
Mohamed El-Erian, the Chief Economic Advisor at Allianz, has made a surprising call for Federal Reserve Chairman Jerome Powell to resign. In an interview on CNBC's "Closing Bell," El-Erian suggested that Powell's resignation could be the "least costly option" to maintain the Fed's independence.
El-Erian's criticism of Powell centres around his handling of transitory inflation and his late decision to hike interest rates. He believes that Powell's mistakes have made the Fed vulnerable to growing investigations, which could potentially lead to the loss of the Fed's independence.
El-Erian, a former CEO of Pimco, did not explicitly state that Powell has been a bad Fed chair. However, he did express several criticisms of Powell's performance, including his communications, which he believes cause market volatility during press conferences.
Despite not explicitly endorsing any specific candidates, El-Erian implied that there are several viable candidates who could stabilize markets if installed. He mentioned that most of the frequently mentioned candidates would be capable of calming any potential market jitters if Powell resigned.
While El-Erian did not name any particular candidates, some sources have listed potential replacements frequently mentioned in discussions around Powell’s possible resignation. These include National Economic Council head Kevin Hassett, former Fed governor Kevin Warsh, and Treasury officials. These figures represent the type of experienced candidates market observers consider as plausible successors.
El-Erian also expressed a preference for Powell to finish his term in May and for the Fed to avoid further attacks. He emphasized the importance of Fed independence and believes that Powell’s resignation might protect it.
[1] Source: CNBC Interview [2] Source: The Wall Street Journal [3] Source: Bloomberg News
- Mohamed El-Erian suggests that Jerome Powell's resignation could potentially safeguard the Federal Reserve's independence, citing concerns about his handling of transitory inflation and communications that cause market volatility.
- In light of growing investigations and the potential loss of the Fed's independence, Mohamed El-Erian implies that there are several experienced candidates, including Kevin Hassett, Kevin Warsh, and Treasury officials, who could stabilize markets if they were installed as the next Federal Reserve chairman.
