Fed Chair Powell’s Biggest Success Was Political, Not Economic: El-Erian

• Despite these misses, Powell will likely be remembered for defending the Federal Reserve’s independence amid mounting political pressure from Trump, the economist said.
• Powell, whose term as chair ends on May 15, will remain on the Board of Governors for the foreseeable future.
• Trump’s nominee, Kevin Warsh, is widely expected to succeed Powell as the next Fed chair.

Mohamed El-Erian, Chief Economic Advisor at Allianz, delivered a sharp assessment of the outgoing Federal Reserve Chair Jerome Powell’s tenure, highlighting that his greatest achievement may have ultimately been political rather than economic.

The economist, in an opinion piece for Project Syndicate published on Wednesday, said that while Powell’s tenure at the central bank had a series of significant “misses,” they would likely be overlooked in favor of his staunch defense of the Fed’s independence.

Powell, whose term as chair will end on May 15, will remain on the Board of Governors at the bank for the foreseeable future, marking a departure from the long-standing tradition of stepping down.

Powell’s “Misses”

El-Erian said that the U.S. economy had struggled with inflation even before the coordinated strikes on Iran exacerbated price pressures. He noted that inflation had been structurally sticky and above the Fed’s 2% target for the sixth consecutive year, as demonstrated in the Jan. 2026 personal consumption expenditures (PCE) report.

“Even absent the latest geopolitical volatility, the US economy would be poised for several more years of above-target inflation,” El-Erian said. He also highlighted the apex bank’s related “transitory” miscalculation, when it underestimated post-pandemic price pressures that later drove inflation to 9.1%.

The economist went on to note the bank supervision lapses tied to the collapses of Silicon Valley Bank, Signature Bank, and First Republic, and also highlighted internal governance concerns, communication confusion, and the failure to establish a durable, long-term monetary policy framework.

Powell’s Legacy

Despite these misses, Powell will likely be remembered for defending the Federal Reserve’s independence amid mounting political pressure from U.S. President Donald Trump, who had repeatedly pushed for lower interest rates and publicly attacked Powell over Fed policy.

The Federal Reserve has maintained a “wait-and-see” approach to interest rates, holding its benchmark interest rate range steady at 3.50%-3.75% for the third consecutive time in April.

“Rather than dwelling on a long list of mishaps—significant policy errors, protracted periods of the Fed overshooting its inflation target, poor communication and compliance, supervisory and other lapses—commentators and historians will remember Powell as the chair who became a bulwark against unprecedented attacks on the central bank’s independence,” El-Erian said.

Several other Wall Street analysts also see Powell’s move to stay on the board as one that will help safeguard the central bank’s institutional independence, even as Trump’s pick, Kevin Warsh, is widely expected to become the next Fed chair.

Meanwhile, U.S. equities climbed higher in Wednesday’s overnight trading session. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.04%; the Invesco QQQ Trust ETF (QQQ) fell 0.11%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) edged higher by 0.15%.

Retail sentiment on Stocktwits for all three indexes was in the ‘bullish’ territory at the time of writing.

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