JUANA SUMMERS, HOST:
For years, Federal Reserve Chairman Jerome Powell has studiously avoided getting dragged into fights with President Trump. But after serving as the president's punching bag, Powell's own gloves are now coming off. The shift comes after Powell says the Justice Department threatened a criminal indictment over the central bank's building renovation and Powell's own testimony on the subject. In a video statement late Sunday, Powell accused the administration of trying to bully the Fed into lowering interest rates.
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JEROME POWELL: This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.
SUMMERS: Powell's tough talk signals a new era in relations between the White House and the Fed. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Jerome Powell is the epitome of the diplomatic central banker. Unlike many of his predecessors at the Fed, Powell never trained as an economist. As he told graduates at his alma mater, Princeton, last spring, his parents wanted him to study economics, but he thought it was boring.
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POWELL: Rather than studying, I had spent my freshman year with fellow campus musicians playing my Martin D-35 acoustic guitar. It was a high school graduation present and one that my parents surely regretted.
HORSLEY: Powell still plays guitar and is a devoted music fan. He made a splash a few years ago when he was photographed at a Dead & Company concert just outside Washington.
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POWELL: Oh, it was terrific. What can I say? I've been a Grateful Dead fan for 50 years.
HORSLEY: Powell grew up in the nation's capital and knew he wanted a career that combined public service with work in the private sector. He served in the Treasury Department during the first Bush administration, then made a lot of money in investment banking and private equity. His net worth is estimated between $20 and $55 million. During the Obama administration, Powell served as an informal ambassador to Republicans on Capitol Hill and helped persuade them not to bust the federal debt ceiling. Obama rewarded Powell with an appointment to the Fed's governing board. He was later promoted to chairman by President Trump.
While Powell's a Republican, he carefully courts support from lawmakers in both parties. He told a gathering of business reporters last year that's one reason he usually wears neckties in a neutral shade of purple.
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POWELL: We are strictly nonpolitical. I can't stress that enough. It's not that we're bipartisan. We are nonpolitical. We don't do that, and so purple was a good color for that. That's all. Plus, I like purple ties.
HORSLEY: Powell's nearly eight years as Fed chair share have seen both soaring unemployment during the pandemic and later the highest inflation in four decades. Nevertheless, Powell's won praise for his handling of those challenges from other central bankers, like Christine Lagarde of the European Central Bank.
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CHRISTINE LAGARDE: I think I speak for myself, but I speak for all colleagues on the panel. I think we would do exactly the same thing as our colleague Jay Powell does - the same thing, right?
UNIDENTIFIED PERSON: Yes.
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HORSLEY: Of course, Lagarde and most other central bankers from developed countries have never faced the kind of relentless pressure campaign that Powell has endured from Trump, who wants much lower interest rates. During his first term, Trump suggested Powell was a bigger threat to the U.S. than Chinese President Xi Jinping. Until now, the Fed chairman has generally refused to take the bait. But as longtime Fed watcher David Wessel of the Brookings Institution told Morning Edition, the Justice Department's criminal probe was the last straw.
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DAVID WESSEL: It looks like they just pushed Jay Powell too far, and he came out with all guns blazing. It's very unusual, and it's particularly unusual for him. He's been very careful not to antagonize directly the president, and that era is over.
HORSLEY: Public service sometimes requires standing firm in the face of threats, Powell said yesterday, channeling the advice he gave those Princeton graduates last spring.
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POWELL: Fifty years from now, you'll want to be able to look in the mirror and know that you did what you thought was right in every part of your life. At the end of the day, our integrity is all we have. Guard it carefully.
HORSLEY: Powell's term as Fed chairman runs through May. He has the option to stay on the Fed's governing board for another two years.
Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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